This study proposes an improved particle swarm optimization method to find optimal power flow by using the power transmission loss as an objective function. In the literature, PSO is a well - known intelligent search method to handle the solution of optimal power flow problem. A novel scheme which is called Improved PSO (IPSO) is defined by modifying the initialization step of PSO algorithm and choosing the load bus voltages, generator active and reactive powers, line flow capacities as penalty functions in the objective function. PSO and IPSO-based optimal power flow solutions are compared with each other on IEEE 118 and 300 bus systems. According to the test results, the power loss obtained by IPSO-based solution has less power loss than PSO-based solution. This proposed method can be used to obtain faster desirable solutions and better power loss results for the optimal power flow problem in case of power loss minimization.