AbstractIn this paper we consider distributed control ofndynamic agents to optimize an overall system performance metric. Due to limited communication resources, there exist structured interconnections among the agents and the interest is placed on synthesizing a suitably distributed control law to provide a given performance level. Based on a Youla–Kucera (Y–K) parameterization approach, the problem of designing a distributed controller to deliver given performance levels for different network topologies is shown to be convex in the Y–K parameterQ. Furthermore, if in addition to structured interconnections, packet drops exist in information transmission among the agents, we provide convex conditions to guarantee mean square (MS) stability and to optimize ℋ︁2system performance. The proposed method is also extended to deal with systems of triangular structure. Copyright © 2007 John Wiley & Sons, Ltd.