Driven by smart grid technologies, a great effort has been made in developing distributed energy resources (DERs) in recent years for improving reliability and efficiency of distribution systems. Emerging DERs require effective and efficient control and coordination in order to harvest their potential benefits. In this paper, we consider optimal DER coordination problem, where the goal is to minimize the total generation cost while meeting total demand and satisfying individual generator output limit. This paper develops a distributed algorithm for solving the optimal DER coordination problem over lossy communication networks with packet-dropping communication links. Under the assumption that the underlying communication network is strongly connected with a positive probability and the packet drops are independent and identically distributed, we show that the proposed algorithm is able to solve the optimal DER coordination problem even in the presence of packet drops. Numerical simulation results are used to validate and illustrate the proposed algorithm.