A comprehensive method is presented in this work to locate faults in distribution systems with distributed generators (DGs). A two-level model is developed for this purpose with both telecommunication and telemetering data employed, so as to make good use of fused information for attaining a more credible optimization solution under scenarios with alarm distortions of feeder terminal units (FTUs) or loss during communication. First, at the upper level, an analytic model is developed to search all potential faulted sections/candidates based on the telecommunication data. Then, on the lower level, a model is presented using the telemetering data to identify the most likely fault location from the candidates provided by the upper model. The essential features of the two-level diagnosis model are demonstrated through a number of case studies. Simulation results have shown that the proposed approach is capable of not only locating the faulted section(s) in a distribution system with DGs but also identifying false and/or missing alarms.