This case study presents a framework for evaluating the sustainability of indirect potable reuse (IPR) and direct potable reuse (DPR) in Las Vegas, Nevada. A system dynamics model was developed to simulate population growth, water supply, water quality, energy costs, net present worth (NPW), and greenhouse gas (GHG) emissions. The model confirmed that DPR could achieve a net reduction in energy costs of up to US$250 million while still ensuring an adequate water supply. However, the high NPW of DPR ($1.0–$4.0 billion) relative to the status quo IPR approach ($0.6 billion) represents a significant economic hurdle, although future monetization of salt loadings and GHGs could reduce that disparity. DPR with ozone‐biofiltration would also be hindered by an estimated concentration of total dissolved solids of up to 1,300 mg/L. Despite these barriers to implementation in Las Vegas, certain site‐specific conditions may make DPR more attractive in other locations.