Multi-shot EPI readout-approaches provide high spatial resolution at reduced geometric distortions and improved SNR in diffusion weighted imaging (DWI). As a specific challenge, multi-shot acquisition data require corrections for motion-induced, shot-specific phase errors, e.g. using additional navigator signals or appropriate self-navigation. Furthermore, proper fat-suppression is challenging in DWI, especially at B0 critical regions, making the use of chemical-shift encoding interesting. Therefore, an iterative, model-based reconstruction algorithm with self-navigation and water/fat decomposition, is proposed in this work. In-vivo examples in the leg and head-neck regions demonstrate improved water/fat separation as compared to acquisition-navigator approaches, while measurement times can be shortened.