The water main burst in Moston Road, Sundorne, at around 3am, causing flooding in the road.
The fire service attended the scene to divert water away from homes, as Severn Trent workers dealt with fixing the pipe.
Water supplies were restored by around 6am.
Shortly after Severn Trent were called to the incident, a spokesman said: "We’re sorry to customers in Shrewsbury who may find that they have low water pressure or no water this morning. This is due to a burst water pipe in the area that our teams are currently working to locate as quickly as possible.
"We’d like to apologise for any inconvenience caused, we know how difficult it is to be without water and we would like to reassure everyone that our teams will work as quickly as possible to get the water supplies back to normal."
An update from the water company at 6.07am said: "We’re pleased to report that all customers should now have their water supplies back on. We’d like to thank everyone for their patience while we worked to restore supplies."
A Shropshire Fire and Rescue spokesman said: "At 3.03am on Saturday, December 25, SFRS Fire Control received a call reporting an incident classified as flooding in Moston Road.
"Severe flooding in roadway caused by burst water main. Fire crew removed fencing to assist with diverting water from several properties. Severn Trent dealt with water main issue.
"One fire appliance was mobilised from Shrewsbury."