A method of in‐situ leakage diagnosis of a water supply network using fire hydrant water flow measurements and simulation by EPANET software was established. A network with 1032 m of water distribution pipes and 350 user‐side water meters in Taipei was separated into five zones. The lowest volume of daily water flow occurred between 1:00 a.m. and 6:00 a.m., with values ranging from 0.004 to 0.785 m3/min; these data can be regarded as a minimum value of water leakage in the network at midnight. The volume of water leakage was strongly correlated with observed pressure transients, enabling the measurement of the water leakage in the network, which ranged from 5.76 to 628 m3/d. The total water leakage simulated by EPANET was 1.48 m3/d in the network. Although this value deviated by 23% from the District Metered Area (DMA) results, both EPANET and DMA tools confirmed that zones 4 and 5 had severe water leakage problems. Simplifying valves and combining neighboring pipes of the same diameter during the EPANET simulation was efficiently tackle water leakage. EPANET allows for quick diagnosis of the water leakage areas, whereas the DMA tool allows for precise measurements of water volume and pressure. The costs of in‐situ diagnosis and EPANET simulation include instruments, labor, and time, and are estimated to be lower than those of the DMA tool. Furthermore, the methodology of this study can reduce the risks of underground working disasters.