The polyethylene glycol‐bonded tetraethyl ammonium hydroxide [PEG‐TEA]OH was synthesized and characterized as a new reusable biodegradable surfactant‐combined base catalyst. The obtained catalyst was successfully applied for the synthesis of 2‐substituted‐2,3‐dihydroquinazolin‐4(1H)‐ones in water via a newly reported synthetic reaction that is the condensation of 2‐aminobenzonitrile and carbonyl compounds. Using this method, a broad range of carbonyl compounds (aromatic as well as aliphatic aldehydes and ketones) were successfully reacted with 2‐aminobnzonitrile in water as a benign and completely nontoxic reaction medium and corresponding products were obtained in good to excellent yields in very short period of time.