Water distribution systems can experience high levels of leakage, originating from different sources, such as deterioration due to aging of pipes and fittings, material defects, and corrosion. In addition to causing financial losses and supply problems, leakages in treated water distribution also represent a risk for public health. Despite several techniques for leak detection are already available, there is still a lot of interest in new non-invasive approaches, especially for scenarios where acoustic techniques struggle, such as in noisy environmental conditions.In this work we investigated the possibility of using cosmic ray (CR) neutrons for the detection of underground leakages in water distribution networks, by exploiting the difference in the above ground thermal neutron flux between dry and wet soil conditions. The potential of the technique has been assessed by means of an extensive set of Monte Carlo simulations based on GEANT4, involving realistic scenarios based on the Italian aqueduct design guidelines. Simulation studies focused on sandy soils and results suggest that a significative signal, associated with a leakage, could be detected with a data-taking lasting from a few minutes to a half-hour, depending on the environmental soil moisture, the leaking water distribution in soil, and the soil chemical composition.Finally, a brief description of a new portable and low-cost detector for thermal neutrons, currently under commission, is also presented.