The invention discloses a power supply area dividing method based on improved gray clustering, including the following steps: S1, establishing an evaluation index system; S2, collecting and preprocessing secondary index data; S3, determining the number of gray classes and the center point thereof; S4, calculating the whitening weight function of each gray class; S5, calculating the integrated weight vector v of the secondary indexes; S6, calculating the clustering coefficient of each secondary index about each gray class; and S7, getting the division result of a power supply area. By improving the most important parts, namely, the index weight calculation method and the whitening weight function design, in gray clustering, the power supply area division result is more accurate. Through reasonable division of the power supply area, optimal construction guidance schemes can be presented for distribution networks after division, in order to improve the utilization rate of assets and promote the overall quality of the power grid.