Damon, whose Water.org organisation provides aid to developing countries to give more people access to safe drinking water and sanitation, feared he would send a wrong message by pouring clean water over himself.
"It posed kind of a problem for me. Not only because there is a drought here in California, but because I co-founded Water.org and we envision a day when everyone has access to a clean drink of water and there are about 800 million people in the world who don't.
"So dumping a clean bucket of water on my head seemed a little crazy," 'The Bourne Identity' star said in a YouTube video.
"We also want to bring adequate sanitation for the 2.4 billion people on planet Earth who don't have it, so I thought a good thing to do was to kind of tie those things together and take toilet water - this is truly toilet water. I've been collecting it from various toilets around the house...
"Now for those of you like my wife who think this is truly disgusting, keep in mind that our water in our toilets in the west is actually cleaner than the water that most people in the developing world have access to. So as disgusting as this may seem, hopefully it will highlight the fact that this is a big problem and together we can do something about it," he added.
The 43-year-old actor then doused himself in the ice cold toilet water, and nominated his 'favourite actor' George Clooney, his 'favourite musician' Bono, and American footballer Tom Brady for the challenge.