We introduce the concept of Kohn–Sham fragment localized molecular orbitals (KS-FLMOs), which are Kohn–Sham molecular orbitals (MOs) localized in specific fragments constituting a generic molecular system. In detail, we minimize the local electronic energies of various fragments, while maximizing the repulsion between them, resulting in the effective localization of the MOs. We use the developed KS-FLMOs to propose a novel energy decomposition analysis, which we name Kohn–Sham fragment energy decomposition analysis, which allows for rationalizing the main non-covalent interactions occurring in interacting systems both in vacuo and in solution, providing physical insights into non-covalent interactions. The method is validated against state-of-the-art energy decomposition analysis techniques and with high-level calculations.