Abstract. We have presented an optimal algorithm for minimal cost loop problem (MCLP), which consists of finding a set of minimum cost loops rooted at a source node. In the MCLP, the objective function is to minimize the total link cost. The proposed algorithm is composed of two phases: in the first phase, it generates feasible paths to satisfy the traffic capacity constraint, and finds the exact solution through matching in the second phase. In addition, we have derived several properties of the proposed algorithm. Performance evaluation shows that the proposed algorithm has good efficiency for small network with light traffic. Our proposed algorithm can be applied to find multicast loops for real-time multimedia traffic distribution.