The use an inverter is one of the representative ways to utilize regenerative braking energy in railway systems. Due to the nature of urban railways that generate a large amount of regenerative energy, the economic advantages are clear. However, in the case of the existing inverter operation method, a method of operating the inverter using the threshold voltage is used, which has a disadvantage in that power cannot be utilized between the no-load voltage and the threshold voltage. Therefore, in this paper, we propose an optimal location selection method and capacity calculation method for installing a regenerative inverter in an urban rail system, and a control method according to the train brake position to increase the regenerative energy utilization rate. First, the inverter capacity and location were selected by selecting the maximum regenerative energy generation for each substation section through the train performance simulation (TPS) based DC power simulation (DCPS). An inverter control method based on train brake position (BP method) is introduced. Finally, PSCAD/EMTDC, a power analysis program, was used to verify the proposed method. As a result, the use of regenerative energy by an inverter increased by about 62.6%, and more energy was saved at nearby substations through the BP method.