To calculate the transmission loss factor at each generator bus, repeated power flow calculations should be performed for each generator bus. The full AC power flow calculation produces precise results but, the size of the Jacobian matrix is large and therefore the calculation speed is slow. The network reduction technique can reduce the size of network and the dimension of the Jacobian matrix, and therefore the calculation time can be reduced. But, the calculation results of TLFs with reduced system contain many errors due to the simple network reduction. This paper presents an algorithm for determining the transmission loss factor through full AC power flow calculations, applying network reduction techniques to overcome these errors. We verified the usefulness of the suggested methods by applying it to the Korean power system.