Major issues in water supply service have changed from expansion of service area to improvement of service quality, i.e., water quality and safety, and early response to emergency situation. This change in the service concept triggers the perceptions of limitation with the current centralized water supply system and of necessities of decentralized (distributed) water supply system (DWSS), which can make up the limitations. DWSS can reduce the possibility of water supply outage by establishing multiple barriers such as emergency water supply system, and secure better water quality by locating treatment facilities neighboring consumers. On the other hand, fluctuation of water demand will be increased due to the reduced supply area, which makes difficult to promptly respond the fluctuating demand. In order to supplement this, hybrid water supply system was proposed, which combined DWSS with conventional water supply system using distributing reservoir to secure the stability of water supply. The Optimal connection point of DWSS to existing water supply network in urban area was determined by simulating a supply network using EPANET. Optimal location of decentralized water treatment plant (or connection point) is a nodal point where changes in pressure at other nodal points can be minimized. At the same time, the optimal point should be selected to minimize hydraulic retention time in supply network (water age) to secure proper water quality. In order to locate the point where these two criteria are satisfied optimally, Distance measure method, one of multi-criteria decision making was employed to integrate the two results having different dimensions. This methodology can be used as an efficient decision-support criterion for the location of treatment plant in decentralized water supply system.