The paper presents an optimization model of a distributed cogeneration system with a district heating network, applied to a real city centre situation. The distributed urban cogeneration system includes both a set of micro-gas turbines, located inside some public buildings, and a centralized cogeneration system based on a Internal Combustion Engine. The objective function adopted for the optimization is the Total Annual Cost for owning, maintaining and operating the whole system. To face the problem a Mixed Integer Linear Program (MILP) is defined and solved by a commercial software. Starting from the thermal and electrical demand of the buildings, the MILP model allows to define the possible installation of the centralized cogeneration ICE (internal Combustion Engine) and the number of microturbines in the different buildings, the optimal lay-out of the district heating network and the optimal operation strategy for the whole system as well. In particular the energy performance and global CO2 emissions are evaluated. (C) 2009 Elsevier Ltd. All rights reserved.