Qatar has very limited freshwater resources. This paper assesses the sustainability implications of using bore water and treated sewage effluent (TSE) for residential water supply (for non-drinking purposes) in a residential compound in Doha, Qatar. The treated bore water was considered for non-drinking domestic applications in kitchens and bathrooms, while the TSE was considered for use in air conditioning cooling systems. Excess TSE was also considered for irrigation use. Water quality from the aquifer in the Al Waab area of Doha was used to design a pre-treatment and desalination process to produce potable water for a local residential compound consisting of 113 villas. The wastewater from these villas consisted of both grey and black water and was proposed to be treated in a sewage treatment plant to produce TSE to operate the cooling systems in the compound. The reject brine from the desalination process was designed to be discharged to sea through the storm water network and the blowdown water from the cooling systems was considered for use in irrigation in surrounding areas. A lifecycle assessment of this closed loop water recycling system was conducted to assess the potential sustainability benefits of reduced greenhouse gas emissions, embodied energy consumption, and water consumption, together with cost savings and employment generation from these water recycling options.