The active power line conditioner (APLC) is considered to be a very efficient type of active power filter that compensates the voltage waveform distortion caused by nonlinear loads in power systems. A new approach is based on a previously presented two-level algorithm, the three-phase optimal harmonic power flow (TOHPF), to investigate the determination of locations and sizes of three-phase (3phis) APLCs. The objective is to minimise the new APLC investment cost, the 3phis voltage distortion, and the system 3phis MW losses while satisfying the 3phis power flow equations, 3phis harmonic power flow equations, 3phis security constraints, and the harmonic standard. The master level of TOHPF determines the compensator/tap settings and the new APLC locations/sizes; the slave level of TOHPF includes subproblems which involve cases of fundamental and harmonic frequencies separately. Test results for an 18-bus distribution system show the applicability of the proposed method.