Static Shunt Compensator (STATCOM) is a powerful member of the Flexible AC transmission system (FACTS) based on voltage source converter. STATCOM is connected in shunt with the system to provide a voltage control of a certain bus by injecting or absorbing reactive power. This paper presents an efficient optimization technique called Moth-Flame Optimization (MFO) algorithm for determining the optimal location and parameter setting of STATCOM. MFO optimization technique is inspired from transverse orientation of the moth flame. STATCOM is incorporated in power system for voltage profile improvement, voltage stability enhancement and power loss minimization. The developed algorithm is validated using the standard IEEE 30-bus test system. However, the developed optimization algorithm including simplified STATCOM model is compared with the conventional particle swarm optimization technique (PSO). The simulation results show that the efficiency and superiority of the developed algorithm for determining the optimal setting of STATCOM moreover, the effectiveness of STATCOM for enhancing the voltage stability and power loss minimizing.