An increasing number of people want to reduce their environmental footprint by using harvested rainwater as a source for drinking water. Moreover, implementing rainwater harvesting (RWH) enables protection against damage caused by increasing precipitation frequency and intensity, which is predicted for Western Europe. In this study, literature data on rainwater quality were reviewed, and based on Dutch climatological data the usable quantity of rainwater in the Netherlands was calculated. For two specific cases, (1) a densely populated city district and (2) a single house in a rural area, the total costs of ownership (TCO) for decentralized drinking water supply from harvested rainwater was calculated, and a life cycle assessment (LCA) was made. For the single house it was found that costs were very high (€60–€110/m3), and the environmental impact would not decrease. For the city district, costs would be comparable to the present costs of centralized drinking water production and supply, but the environmental benefit is negligible (≤1‰). Furthermore, it was found that the amount of rainwater that can be harvested in the city district only covers about 50% of the demand. It was concluded that the application of rainwater harvesting for drinking water production in the Netherlands is not economically feasible.