Thermostatically controlled appliances (TCAs) have great thermal storage capability and are therefore excellent demand response (DR) resources to solve the problem of power fluctuation caused by renewable energy. Traditional centralized management is affected by communication quality severely and thus usually has poor realtime control performance. To tackle this problem, a hierarchical and distributed control strategy for TCAs is established. In the proposed control strategy, target assignment has the feature of self-regulating, owing to the designed target assignment and compensating algorithm which can utilize DR resources maximally in the controlled regions and get better control effects. Besides, the model prediction strategy and customers’ responsive behavior model are integrated into the original optimal temperature regulation (OTR-O), and OTR-O will be evolved into improved optimal temperature regulation. A series of case studies have been given to demonstrate the control effectiveness of the proposed control strategy.