The first 800mm steel pipes were installed near Welby, about eight kilometres east of Grantham.
They are part of a 39km stretch of pipeline linking Grantham with Peterborough.
It is one of Europe's biggest environmental projects and the largest drinking water project the UK has seen for a generation.
Hundreds of kilometres of underground, interconnecting pipelines, from Elsham in North Lincolnshire to Essex and Suffolk, will move water from wetter to drier areas.
Once complete, the network will move a staggering 265 million litres of water a day – helping to prevent the risk of drought across the east of England.
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As important as the network itself, Anglian Water is committed to leaving a long-lasting green and social legacy along the route.
The water company has donated 2,000 books to 11 primary schools along the route, built special 'navigation' fences to help bats, placed dozens of boxes for dormice and barn owls and donated a life-saving defibrillator.
Project manager Glenn Harvey said the East of England is one of the driest regions in the UK with one of the fastest-growing populations.
He added: "The scale and investment of our work matches its importance. We’ve spent many years developing, and now implementing, our plans to combat water shortages and increase resilience across the region.
"Simply put, without the new water main grid, demand for water could outstrip supply as soon as 2030."
The 39km pipeline will link with a 34km section to the north, between Lincoln and Grantham, which is due to be completed in the summer.
Work on the sections to the south, linking Peterborough to Downham Market, Bury St Edmunds, Colchester and Ipswich, is expected to start later this year.
The new grid is expected to go into service in 2025.
