This article presents a novel fault-location method for unbalanced distribution networks in the presence of distributed generations. By utilizing the linear least square method, the candidate faulty lines are selected, and the injected fault currents are derived from the sparse voltage phasor measurements. According to the obtainability of the fault currents, two types of approaches are adopted for estimating the per-unit fault location. By taking advantage of the precise fault-location scheme, the actual faulted line and the accurate fault location are identified. Also, in order to compromise between the fault-location accuracy and the allocation costs, an optimal monitor-allocation algorithm is developed for determining the Pareto-optimal set of meter placements that have the minimal number of monitors to satisfy the requirements of fault-location accuracy. The proposed optimal allocation algorithm and the two types of fault-location approaches are validated on a modified IEEE 123-node test feeder using Matlab and Simulink.