This paper proposes a topological locating algorithm to determine the location of the power quality event source. This algorithm makes use of the information on the topology of the monitored network and on the direction of PQ events. As a result, the bus incidence matrix is modified using monitor location and the direction matrix is constructed. With this information, the algorithm determines the suspected locations of the PQ events. To reduce suspicious areas, it utilizes event cause and related equipment. In case of line fault event, it calculates the distance from the monitor to the location of event source. The overall algorithm is applied to the IEEE test feeder and accurately identifies the event source location.