This paper proposes a novel hybrid recursive method for distribution system reliability evaluation to deal with the computational limit and low-efficiency problem which exist in previously developed techniques as the system becomes larger. This method includes a bottom-up process and a top-down process, which are developed on the basis of a recursive principle, and the synthesis of both processes yield the reliability performance of each bus of the system. The bottom-up process considers the effects of downstream failures on upstream customers, and the top-down process considers the effects of upstream failures on downstream customers. In addition, a novel switch zone concept is defined and introduced into the bottom-up recursive process to save the computation cost. Besides, section technique (ST) and shortest path method (SPM) are employed to effectively simplify the recursive path and thus, the computation efficiency can be improved. The most significant feature of the proposed method over ST, SPM, failure mode and effect analysis (FMEA) is that it provides a more generalized equivalent approach to maximally simplify the network for reliable evaluation irrespective of the network topology. The effectiveness of the proposed method has been validated through comprehensive tests on Roy Billinton test system (RBTS) bus 6 and a practical-sized distribution system in China.