In this paper, a new method is proposed to determine the optimal allocation of FACTS (flexible AC transmission system) devices. The method makes use of two-layered tabu search that evaluates integer and continuous variables. The emergence of the power market makes power system operators consider how to maximize the transmission capability. In this paper, UPFC of FACTS is employed to control power flows so that the transmission capability is maximized. This paper determines the optimal allocation of UPFC for several load patterns with two-layered tabu search. The effective of the proposed method is demonstrated in a sample system