Communication is the heart of the Smart Grid. Smart Grid metering and control applications require fast, reliable and secured two-way communication network. In this study, random signal strength (RSS) based localization of smart meters of Advanced Metering Infrastructure (AMI) has been proposed using the location information of meters whose position are known. Based on the location information, a loop free routing protocol has been developed. As a consequence, loop freedom, local routing decision and limited flooding, faster and reliable data transmission can be achieved.