This paper proposes an approach to optimize the technical potential of thermal groundwater use by determining the optimal sizing and placement of extraction–injection well doublets. The approach quantifies the maximum technically achievable volume of extracted groundwater in a given area and, hence, the amount of heat exchanged with the aquifer, considering relevant regulatory and hydraulic constraints. The hydraulic constraints ensure acceptable drawdown and rise of groundwater in extraction and injection wells for sustainable use, respectively, prevention of internal hydraulic breakthroughs, and adequate spacing between neighboring doublets. Analytical expressions representing these constraints are integrated into a mixed-integer linear optimization framework allowing efficient application to relatively large areas. The applicability of the approach is demonstrated by a real case study in Munich, where the geothermal potential of each city block is optimized independently. Six optimization scenarios, differing in terms of required minimum installed doublet capacity and spacings between doublets, underline the adaptability of the approach. The approach provides a comprehensive and optimized potential assessment and can be readily applied to other geographic locations. This makes it a valuable tool for thermal groundwater management and spatial energy planning, such as the planning of fourth and fifth generation district heating systems. •A new approach to optimize the technical potential of thermal groundwater use.•The approach determines the optimal sizing and placement of well doublets.•The approach considers relevant technical and regulatory constraints.•Hydraulic constraints on groundwater pumping and injection rates are included.•Suitable for thermal groundwater management and spatial energy planning.