According to the Korean government’s policy to demonstrate and expand renewable energy sources, distributed generators such as photovoltaic (PV) and wind power (WP) systems are energetically installed and operated in distribution systems. However, there are many issues related to power quality problems including an over-voltage phenomenon when the PV systems were interconnected and operated. In order to overcome these problems the electric power company has installed the step voltage regulator (SVR) in primary feeders interconnected with PV systems, and also has established technical guidelines for distributed generators to stabilize the customer voltages. However, despite such voltage regulators and technical guidelines, it is difficult to maintain the customer voltages within the allowable voltage limit. In order to actively host a large-capacity PV system, this paper proposes an optimal voltage control algorithm of micro hydropower generator (MHG) to keep customer voltages within the allowable voltage limit and presents an evaluation algorithm for hosting capacity of PV system based on a sensitivity analysis method. Furthermore, this paper performs PSCAD/EMTDC modeling based on the proposed algorithm and analyzes characteristics of customer voltages based on various scenarios related to the location and capacity of the PV system and MHG. From the simulation results, it is confirmed that the proposed methods can contribute to the stabilization of the customer voltages and improve the hosting capacity of the PV system in a distribution system.