Voters in Colebrook approved a $6.5 million bond to replace the 1880's water system by a margin of about 15 to one.
The vote was 249 in favor and 17 against, Town Manager Becky Merrow said.
The system was leaking more than 70 percent of the water. That is the worst in the state, according to the state's Department of Environmental Services which has been pressuring the town to fix it.
Grants and other assistance will reduce the cost to about $3 million for the town of 2,300.
Town officials said if the bond had not passed they would have lost the grants.
In Lancaster voters approved a $4.7 million bond to improve the sewage system on a vote of 114 to 14, Town Manager Ed Samson said.
Town officials said money was being wasted because storm water was entering the sewage system and needlessly being treated as waste.