The increasing energy demand and reliance on renewable resources have highlighted the need for large-scale energy storage technologies. Underground energy storage, particularly in the form of Compressed Air Energy Storage (CAES) and Underground Hydrogen Storage (UHS) systems, offers an efficient solution for managing supply and demand fluctuations. The success of these technologies depends on a thorough assessment of geological and geomechanical conditions, including porosity, permeability, rock mechanical strength, and susceptibility to faults and groundwater interactions. Three primary storage environments have been identified: porous reservoirs, salt caverns, and engineered underground spaces. Salt caverns, due to their high impermeability and stability, are considered the most suitable option for long-term storage. Porous reservoirs offer high volumetric capacity but face challenges such as leakage and mixing with aquifers. Engineered spaces provide high design flexibility but involve higher implementation costs. Iran, with its salt domes, carbonate reservoirs, and porous sedimentary units, possesses significant potential for the development of underground energy storage technologies. However, attention to seismic hazards, geochemical processes, and environmental considerations, alongside economic assessments, is essential for the sustainable operation of these systems. Overall, underground energy storage can serve as an effective strategy to enhance energy security and reduce dependence on fossil fuels. This article provides a comprehensive review of engineering geological considerations in underground energy storage.