Damage due to abnormal conditions in water distribution systems is attributable to direct causes, such as facility deterioration, as well as indirect causes, including inadequate management, natural disasters, and negligence of a manager. Such damage can be prevented from being spread by closing a shut-off valve to isolate the incident area, although additional damage may occur in the area isolated by the control valve due to water outage, thus requiring a structural solution. Therefore, this study proposed an optimal segment division technique that minimizes the damage due to water outage occurring in the isolated area by installing a shut-off valve at an appropriate location through an optimal valve location determination model designed based on various urban development scenarios. The proposed technique was applied to a benchmark network and J-city network in Korea for performance verification. This technique can be used to select the number of installable valves and find the optimal valve locations according to the urban development scenario.