The objective of the study was to assess the impact of drinking water sanitation on performance and welfare outcomes in broiler chickens kept on fresh or used litter. We hypothesized that under a more challenging environment (used litter), the impact of water sanitation would differ to that in a less challenging environment. Seventy-two pens housed 1,944 male broilers for 35 D. The treatments included a tap water control, water with fully activated ClO2, water with partially activated ClO2, and water with iodine, offered to birds housed on either clean or used pine shavings. The latter resulted from housing 20 birds per pen that had been vaccinated with Coccivac-B. The intended setup was successful as birds on used litter showed worsened feed conversion, body weights, and daily gains early in the production cycle, although these differences were lost over time. Water sanitation did result in altered drinking behavior, with fewer drinking bouts for birds on iodine treatment than for birds on control and fully activated ClO2 treatments. Iodine-treated birds showed less severe footpad lesions than birds on other treatments. Similarly, birds on fresh litter had smaller lesions than those on used litter. Iodine- and fully activated ClO2–treated birds experienced less chronic stress than control birds. The impact of water sanitation did not differ when birds were in a challenging environment (used litter) compared with those in a cleaner environment. Water sanitation did provide some benefits for production (body weight and daily gain) and welfare outcomes (footpad dermatitis and chronic stress).