In locations with low population density or constraints in technology, resources, and personnel, the use of centralized wastewater treatment systems is not be justified. In such areas, decentralized wastewater treatment systems offer several advantages overcentralized systems. In these systems, the treatment and disposal of effluent is close to the source of waste water production, which reduces investments in a long sewage network and enables the application of other methods of wastewater transport, such as pressure sewerage and vacuum sewerage. A significant advantage of decentralized systems is their ability to be installed quickly, while also enabling local water reuse and implementation of the principles of circular economy, thereby enhancing productivity. In Serbia, according to the 2011 census, there are 449 settlements with more than 2,000 equivalent inhabitants whose wastewater should undergo at least secondary biological treatment. Given that approximately 80% of these settlements have populations ranging from 2,000 to 10,000, the implementation of decentralized wastewater treatment systems becomes imperative for sustainable water protection in Serbia. This paper provides a brief overview of decentralized wastewater treatment systems and, using the example of the municipality of Pirot, highlights the advantages and significance of implementing decentralized treatment to ensure a safe, reliable, economically justified, and ecologically sound solution for protecting water resources from pollution.