Device-to-device (D2D) communications underlaying a cellular infrastructure has recently been proposed as a means of increasing the resource utilization, improving the user throughput and extending the battery lifetime of user equipments. In this paper we propose a new distributed power control algorithm that iteratively determines the signal- to-noise-and- interference-ratio (SINR) targets in a mixed cellular and D2D environment and allocates transmit powers such that the overall power consumption is minimized subject to a sum-rate constraint. The performance of the distributed power control algorithm is benchmarked with respect to the optimal SINR target setting that we obtain using the Augmented Lagrangian Penalty Function (ALPF) method. The proposed scheme shows consistently near optimum performance both in a single-input-multiple-output (SIMO) and a multiple-input-multiple-output (MIMO) setting.