Since the 1980s, improper human activities and excessive water-resource exploitation have made a serious impact on the water environment of the Huaihe River Basin. Both water shortage and water pollution are important factors restricting local socio-economic development. To demonstrate the interactions between the socio-economic system and the water-resource system, a physically based hydro-economic model was developed. After the division of subregions in the river basin, a distributed model was developed that describes the coupled systems of water quantity–water quality–socio-economics (WQQSE), and that simulates the changing processes of water quantity and water quality from 1991 to 2000. On the basis of the hydro-economic model, an optimal-control model was also developed to research the maximal sustainable socio-economic scale of the river basin by considering the hydro-economic interaction, water supply, water quality and socio-economic development constraints. The results demonstrated that the developed models can be used to depict the hydro-economic interaction and to provide preferable management strategies to meet the development needs of the future.