One of the key elements in the transformation towards a circular economy (CE) is providing more sustainable practices for resources and waste management. Improvement actions focused on transformation towards a CE should be targeted at all groups of materials and waste. As water is essential for human survival and well-being and plays a significant role in sustainable development (SD), the actions related to the reuse of water and the recovery of raw materials from wastewater and other water-based waste should be taken. The paper presents a proposition for a new CE model framework in the water and wastewater sector, which includes the six following actions: reduction-prevent wastewater generation in the first place by the reduction of water usage and pollution reduction at source; reclamation (removal)-an application of effective technologies for the removal of pollutants from water and wastewater; reuse-reuse of wastewater as an alternative source of water supply (non-potable usage), recycling-recovery of water from wastewater for potable usage; recovery-recovery of resources such as nutrients and energy from water-based waste, and rethink-rethinking how to use resources to create a sustainable economy, which is `free` of waste and emissions. The novelty of the proposed CE model framework is that it presents possible ways of implementing CE principles in the water and wastewater sector, with a strong emphasis not only technological but also organisational and societal changes. Application of the proposed model may help to further transform the European economy to the CE model. Moreover, the indicated model can be significant tool supporting an assessment of local or regional progress towards CE in the water and wastewater sector and further environmental management and planning.