The present paper presents an optimal capacitor placement (OCP) algorithm for voltagestability enhancement. The OCP issue is represented using a mixed-integer problem and a highly nonlinear problem. The hybrid particle swarm optimization (HPSO) algorithm is proposed to solve the OCP problem. The HPSO algorithm combines the optimal power flow (OPF) with the primal-dual interior-point method (PDIPM) and ordinary PSO. It takes advantage of the global search ability of PSO and the very fast simulation running time of the OPF algorithm with PDIPM. In addition, OPF gives intelligence to PSO through the information provided by the dual variable of the OPF. Numerical results illustrate that the HPSO algorithm can improve the accuracy and reduce the simulation running time. Test results evaluated with the three-bus, New England 39-bus, and Korea Electric Power Corporation systems show the applicability of the proposed algorithm.