This paper presents a hybrid simulated annealing (SA) and mixed integer linear programming (MILP) approach for static expansion planning of radial distribution networks with distributed generators (DGs). The expansion planning problem is first modeled as MILP optimization problem with the goal of minimizing the investment cost, cost of losses, cost of customer interruptions due to failures at the branches and at DGs and the cost of lost DG production due to failures at branches. In order to reduce the complexity of planning problems the decomposition of the original problem is proposed into a number of sequences of sub-problems (local networks) that are solved using the MILP model. The decomposition and solution process is iteratively guided and controlled by the proposed SA algorithm that employs the proper intensification and diversification mechanism to obtain the minimum total cost solution.