PurposeMulti‐shot diffusion‐weighted EPI allows an increase in image resolution and reduced geometric distortions and can be combined with chemical‐shift encoding (Dixon) to separate water/fat signals. However, such approaches suffer from physiological motion‐induced shot‐to‐shot phase variations. In this work, a structured low‐rank‐based navigator‐free algorithm is proposed to address the challenge of simultaneously separating water/fat signals and correcting for physiological motion‐induced shot‐to‐shot phase variations in multi‐shot EPI‐based diffusion‐weighted MRI.Theory and MethodsWe propose an iterative, model‐based reconstruction pipeline that applies structured low‐rank regularization to estimate and eliminate the shot‐to‐shot phase variations in a data‐driven way, while separating water/fat images. The algorithm is tested in different anatomies, including head–neck, knee, brain, and prostate. The performance is validated in simulations and in‐vivo experiments in comparison to existing approaches.ResultsIn‐vivo experiments and simulations demonstrated the effectiveness of the proposed algorithm compared to extra‐navigated and an alternative self‐navigation approach. The proposed algorithm demonstrates the capability to reconstruct in the multi‐shot/Dixon hybrid space domain under‐sampled datasets, using the same number of acquired EPI shots compared to conventional fat‐suppression techniques but eliminating fat signals through chemical‐shift encoding. In addition, partial Fourier reconstruction can also be achieved by using the concept of virtual conjugate coils in conjunction with the proposed algorithm.ConclusionThe proposed algorithm effectively eliminates the shot‐to‐shot phase variations and separates water/fat images, making it a promising solution for future DWI on different anatomies.