Water pipelines deliver water of daily-life demand to customers. However, pipelines tend to be damaged after years of use. Thus, many waterworks are now faced with the major task of water pipeline rehabilitation. However, budgets for pipeline replacement are limited. The present study aims to propose a long-term plan for water pipeline rehabilitation under limited rehabilitation budgets that utilizes a damage occurrence model. Especially, this study attempts long-term rehabilitation planning by efficiently allocating a budget for pipeline rehabilitation. First, a simulation model is used to obtain the failure rate curve which uses reliability theory and data analysis for pipeline leakage accidents, and Monte Carlo simulation is applied to the simulation model. Secondly, in order to set the best planning, several cases with changed annual replacement rate are applied to this study. Finally, the simulation model is applied to key pipelines. The key pipelines are vital pipelines located in central districts. Thus, the replacement of key pipelines is considered to be the priority. From these steps, this study is expected to provide desirable alternative plans for water pipelines when the budget for replacement is limited.