This article proposes a new methodology for simultaneous integration of water and energy in heat‐integrated water allocation networks (WAHEN). A novel disjunctive model is first developed to determine an optimal water allocation network (WAN) where water and energy are integrated in one step. Based on the optimal WAN, a detailed heat exchanger network (HEN) to satisfy the utility target is then synthesized. Although the final network structure is obtained through two steps, the targets of freshwater and utility are optimized simultaneously. The proposed method has specific advantages. First of all, it can capture a tradeoff among freshwater usage, utility consumption, and direct heat transfer by nonisothermal mixing. Second, it can greatly reduce the complexity of subsequent HEN design. Finally, it is effective for simultaneous water and energy integration in large‐scale WAHEN systems. The advantages and applicability of this new method are illustrated by three examples from literature. © 2015 American Institute of Chemical Engineers AIChE J, 61: 2202–2214, 2015