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The reactive power demand of the induction generator is significantly increased when the generator runs close to the rated operating point. The losses are increased due to the increased reactive power flow. Due to the limitation of converter ratings in the doubly fed induction generator (DFIG) system, power clipping may occur at turbine-rated conditions. In this paper, an optimum strategy for reactive power flow in the DFIG scheme is proposed to capture maximum wind power with minimum total losses. The proposed strategy considers the machine-copper loss, converters' loss, and filter loss. Reasonable values for converter ratings are investigated and compared. The modeling of the DFIG-based wind turbine along with its control scheme is designed in Matlab/Simulink environment. Simulation results are presented to ensure the validity and feasibility of the proposed strategy for reactive power management.Index Terms-doubly fed induction generator, reactive power management, loss minimization of wind generation schemes, and wind-based distributed generation.