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Tanker-based distribution systems have been prevalent in developing countries to supply clean and pure water in different regions. To efficiently operate such tanker service systems, a large fleet of tanker trucks are required to transport water among several water sources, water treatment plants and consumers spanning across the regions. This requires tighter coordination between water suppliers, treatment plant operations, and user groups to use available water resources in a sustainable manner, along with the assurance of water quality and timely delivery. This paper proposes a novel formulation to assist decision-making for optimizing tanker-based water distribution systems and treatment operations, with an overall objective of minimizing the total operating cost such that all of the constraints related to the water demand, supply operations, and environmental and social aspects are honored while supplying water to a maximum number of users. The problem is formulated and solved as a mixed integer linear programming (MILP) optimization framework and captures all of the nuances related to (i) water availability limitations and quality constraints from different sources, (ii) maintaining water quality as it transports via tankers, (iii) water demands for various end-use purposes, and (iv) transportation across a water supply chain. The proposed novel framework is applied to a realistic urban model to find the optimal tanker delivery schedule, ensuring appropriate treatment and timely delivery of water. The results of the case study conducted on a representative-scale problem also elucidate several aspects of treatment plant operation and consumer demand fulfillment for the efficient planning and management of tanker-based water distribution systems.