Abstract The optimized operation of an inter-basin water transfer system is a widely used approach to achieving optimized regional water resource allocation. The costs of water transfers vary considerably, depending on the composition of the water source, the target audience and the route and distance of the transfer. This study proposes a multi-scenario optimization model for the operation of inter-basin water transfer-supply systems that balances the cost–benefit relationships. A two-objective optimization model is first established including minimizing the sum of squared water supply deficits and the cost of water transfers. Three water transfer scenarios are developed for different cost–benefit relationships. Based on these scenarios, the established optimization model is further converted into a single-objective optimization model to avoid the direct calculation of complex water transfer costs. The model is finally solved to obtain water transfer schemes. The proposed model is applied to the eastern route of the South-to-North Water Diversion Project in China. The results show that with a contracted diversion of 60% of the Yangtze River, the reliability of the water supply is 78.2% and the water shortage index is 2.8%, which is a compromise between balancing the water shortage index and the volume and cost of water transfer.