As distributed generators in distribution networks have brought much influence to the fault current, the traditional fault-section locating algorithm of distribution networks may not work. In this paper, a new switching function is built which can be used in the distribution network with single power supply and multi power supplies. A regional processing method is used in this paper, which divides the distribution network into several independent regions, then the fault locating algorithm is used in these independent regions. The regions without DG connection are eliminated if fault current is not detected. So the complexity of computation of fault-section location is reduced. Ant colony algorithm is a good optimization algorithm of swarm intelligence. Because of its positive feedback, fault tolerance and distributed computing features, good application effect of locating faulty section in distribution network can be attained. In order to overcome the disadvantages such as large amounts of calculation, long searching time, local optimal. Ant colony algorithm is improved by adaptive dynamic modifying pheromone. Ant system with elitist strategy and MMAS are also used in this paper. This improved algorithm is used in distribution network with multi distributed generators. The results of example analysis show the effective and good fault tolerance of the algorithm.