The palm oil milling process consumes a large quantity of water for the oil extraction process and, consequently, generates a larger amount of wastewater. Palm oil mill effluent (POME) is polluted aqueous waste with high BOD. Usually, the mills simply employ an open pond anaerobic treatment to handle the POME. This requires large land area since the retention time is substantially long. The problem is even more serious in the rainy season, which is coincident with the high yield season of the palm fruit. This work seeks alternative use of waste streams in the process in order to reduce freshwater consumption and wastewater generation. By a mass integration technique, the allocation of waste streams back to the process is possible. The optimum process was determined by mathematical models of three subsystems. The objective functions were set to provide minimum freshwater demand or minimum oil residue in the POME. The optimization constraints were obtained from the experiment and technical specifications/characteristics of the equipment. Matlab optimization toolbox was used to solve the optimization problems. It was found that the recycle of the waste streams had reduced the freshwater consumption and POME by 65% and 67%, respectively.