Korea District heating corp. recently give an attention to combine the district heating and supply pipes as a two pipe system that are in the present system separated with room heating and warm water supply pipe, and the two pipe system is commonly applied for heating service in European countries. In the new two pipe system, only one heat source is supplied to a house and partitioned into room heating and warm water supply by household substation. So the effective distribution of supplied heat source in accordance to user intention is very important. This paper presents the development and performance test of three-way proportional control valve for a combined heat source system in district heating. The proposed valve is controlled to partition heat source into two different directions : hot water distributor for space heating and household substation for warm water supply in response to the pressure drops of tap water caused by the user. The performance investigation is shown within 3% of error compared to the theoretical model of the three-way proportional valve and its controllability is verified.