Magnetic control distribution transformer combines the distribution transformer and magnetic control reactor to form a compact shape and have both voltage transform and reactive power compensation capabilities. In this paper, the principle of a 10 kV/0.4 kV, 630 kVA magnetic control distribution transformer is analyzed, the corresponding finite element model is established, and the finite element simulation under rated load is completed. The simulation results show that the transformer can normally change voltage and transfer electric energy while output reactive power. The topology parameters and reactive power output are optimized by multi-objective heat exchange optimization algorithm, so that the transformer can output reactive power as much as possible under the condition of small volume.