This paper presents a mathematical formulation for the optimal reactive power control problem using the fuzzy set theory. The objectives are to minimize real power losses and improve the voltage profile of a given system. Transmission losses are expressed in terms of voltage increments by relating the control variables, i.e., tap positions of transformers and reactive power injections of VAR sources, to the voltage increments in a modified Jacobian matrix. This specific formulation of the problem does not require the Jacobian matrix inversion, and hence it will save computation time and memory space. The objective function and the constrains are modeled by fuzzy sets. Linear membership functions of the fuzzy sets are defined and the fuzzy linear optimization problem is formulated. The solution space in this case is defined as the intersection of the fuzzy sets describing the constraints and the objective functions. Each solution is characterized by a parameter that determines the degree of satisfaction with the solution. The optimal solution is the one with the maximum value for the satisfaction parameter. Results for the application of this approach on test systems reveal its numerous advantages.