The reactive power compensation can optimize the voltage distribution in AC-DC hybrid distribution network, reduce the network loss, and increase the safety margin of the network then improve the power supply reliability. In order to realize the directional compensation of the reactive power in AC-DC hybrid distribution network and describe the weak point of the voltage in the system directly, a reactive power compensation method based on sensitivity analysis is proposed. The alternating iteration method is adopted, and the power flow of AC-DC hybrid distribution network is calculated to obtain the Jacobian matrix in which the power flow has converged. Then, the sensitivity of node voltage change on reactive power injection is calculated, and the point with the maximum sensitivity is selected as the reactive power compensation access point. In addition, in the aim of the low system power factor, the reactive power compensation capacity of access point is determined. An example analysis conducted on 11-node system shows that this method takes less time to calculate and has better compensation effect compared with the harmony algorithm. The analysis results show that the proposed method can raise the system voltage level with the minimum compensation capacity at the greatest extent and effectively reduce the system network loss.