Designing an effective isolation valve system (IVS) is vital to enhance resilience against unforeseen failures in water systems. During isolation, the system’s hydraulics undergo changes, potentially causing alterations in flow direction and velocity, leading to the dislodgement of accumulated materials and triggering unexpected water quality incidents. This study presents a novel IVS design approach by integrating the consideration of flow direction change (FDC) as an additional constraint within conventional reliability-based models. Two optimization models, Optimization I and Optimization II, prioritize reliability, with the latter also factoring in valve installation cost as a multi-objective function. Performance evaluation metrics, such as the Hydraulic Geodesic Index (HGI), Modified Resilience Index (MRI), and robustness index, were employed for a comprehensive analysis. The results indicated more than 40 instances of FDC in the traditional design, challenging the conventional notion that a higher number of valves inherently reduces risk. The superiority of the proposed model persisted for the single reservoir network in Optimization II. However, for networks with multiple reservoirs, the traditional design outperformed the proposed model, particularly in terms of cost. Nevertheless, when comparing designs with similar reliability, the proposed model showcased a superior performance, despite its higher associated cost. Notably, the proposed approach exhibits potential cost-effectiveness, considering the potential economic losses attributable to water quality incidents. In summary, the implementation of this methodology can effectively manage both water quality and quantity, enabling the identification of vulnerable pipes within the network for sustainable management.