In response to the high cost and high risk associated with traditional de novo drug discovery, investigation of potential additional uses for existing drugs, also known as drug repositioning, has attracted increasing attention from both the pharmaceutical industry and the research community. In this paper, we propose a unified computational framework, called DDR, to predict novel drug-disease associations. DDR formulates the task of hypothesis generation for drug repositioning as a constrained nonlinear optimization problem. It utilizes multiple drug similarity networks, multiple disease similarity networks, and known drug-disease associations to explore potential new associations among drugs and diseases with no known links. A large-scale study was conducted using 799 drugs against 719 diseases. Experimental results demonstrated the effectiveness of the approach. In addition, DDR ranked drug and disease information sources based on their contributions to the prediction, thus paving the way for prioritizing multiple data sources and building more reliable drug repositioning models. Particularly, some of our novel predictions of drug-disease associations were supported by clinical trials databases, showing that DDR could serve as a useful tool in drug discovery to efficiently identify potential novel uses for existing drugs.