Abstract The active distribution network (ADN) can provide the reactive power ancillary service (RPAS) to improve the operations of the transmission network operations (such as voltage control and network loss reduction) as distribution generation grows. In this context, an RPAS market is required to motivate the ADN to provide the RPAS to the transmission network since the transmission system operator (TSO) and the distribution system operator (DSO) are different entities. Hence, to obtain the TSO–DSO coordination in the RPAS market, this study proposes a two‐stage market framework on the basis of the successive clearing of the energy and RPAS markets. Additionally, a distributed market‐clearing mechanism based on an alternating direction method of multipliers (ADMM) is adopted to guarantee TSO's and DSO's information privacy. Furthermore, a binary expansion (BE) method is used to linearise the non‐convex bilinear terms in the market‐clearing model. The effectiveness of the proposed RPAS market framework and distributed market‐clearing mechanism is validated using two different test systems with different system scales.