With the purpose of making calculation more efficient in practical hydraulic simulations, an improved algorithm was proposed and was applied in the practical water distribution field. This methodology was developed by expanding the traditional loop-equation theory through utilization of the advantages of the graph theory in efficiency. The utilization of the spanning tree technique from graph theory makes the proposed algorithm efficient in calculation and simple to use for computer coding. The algorithms for topological generation and practical implementations are presented in detail in this paper. Through the application to a practical urban system, the consumption of the CPU time and computation memory were decreased while the accuracy was greatly enhanced compared with the present existing methods.