This paper introduces a novel loss allocation methodology tailored for active distribution networks, inspired by the superposition theorem. Our method extends the application of the superposition theorem to both loads and generators, streamlining the loss allocation process and eliminating the need for complex Z-bus calculations. By leveraging the concept of ‘‘effective current’’, derived through a vector projection approach, our method offers a practical and scalable solution for branch loss allocation in active distribution networks. The proposed approach eliminates the limitations and computational burden associated with traditional methods, ensuring fairness and transparency. The Loss allocation process is demonstrated through an illustrative example, showcasing the effectiveness of our methodology in accurately allocating losses to individual network participants. A comprehensive comparison with established linear loss allocation methods highlights the advantages of the proposed approach, particularly in terms of fairness and applicability to unbalanced systems. The proposed methodology represents a significant advancement in loss allocation techniques for distribution networks, offering a versatile and efficient solution applicable across various operational scenarios. Comparisons with existing methods and validation tests using numerical examples, including radial and weakly-meshed systems with and without distributed generation integration. Furthermore, its efficacy and reliability are validated through numerical examples, including three-phase unbalanced systems, demonstrating its practical applicability. The proposed methodology holds promise for enhancing the economic viability and sustainability of distribution networks, paving the way for future research and implementation efforts.