The economic viability of tidal energy projects will likely require large-scale deployment, with tens, or even hundreds, of turbines positioned in an array. There is limited published research available on the viability of large-scale deployments, which will depend on both the expected energy yield and potential adverse hydro-environmental impacts. This leads to the question of how best to position turbines in large-scale arrays for maximum energy capture with minimal associated hydro-environmental impacts. The primary aim of this research was the further development of an existing two-dimensional tidal flow model for optimising tidal turbine arrays relative to both power output and potential hydro-environmental impacts. Turbine impacts are simulated using a momentum sink approach and an optimisation algorithm was implemented, which determines an optimal array configuration for maximum energy capture, whilst employing spatial and environmental impact constraints. Application of the developed model to an idealised test case demonstrated that a staggered array is optimal, if one considers maximising power capture alone, while a fence layout was optimal, when considering both power output and associated impacts. In both the scenarios, the optimised configurations produced higher efficiencies than symmetrical inline arrays. To demonstrate the model’s applicability to a real tidal environment, it was applied to a case study site; the Shannon Estuary, along the West Coast of Ireland. To the authors’ knowledge, this is the first automated array optimisation model to incorporate hydro-environmental impact constraints with the aim of determining specific optimised array configurations with quantifiable efficiencies. The approach could be extremely useful for determining the economic viability of proposed arrays, enabling determination of ‘environmentally acceptable’ levels of tidal energy extraction, and thereby allowing the completion of realistic and accurate early stage cost–benefit analyses for tidal energy projects. The model is therefore, potentially, a very valuable tool for tidal energy researchers, developers and planners.