One of the strategies for water storage in arid and semi-arid areas such as Iran is the construction of underground dams; however, identifying suitable sites for the construction of these structures remains a major challenge. The aim of this paper is to identify the optimal locations for the construction of underground dams using a geographic information system and multi-criteria decision making techniques. Firstly, thematic maps were prepared in ArcGIS environment including geological condition, land use, landslide potential, topography, water stress, aquifer area and distance from dam, village, qanat, stream, fault, airport and road. Hierarchical analysis and fuzzy logic methods were used to weight the prepared maps. By removing unsuitable and restricted areas for the construction of underground dams, a final potential map for this structure was prepared. The results show that the provinces of Razavi and South Khorasan, Kerman, Yazd, Sistan and Baluchistan, Hamedan, Qazvin, Zanjan, Markazi and Qom have greater potential for the construction of underground dams than other provinces in the country. Finally, to validate the results, a comparison was made between the results presented in this study and several successful underground dam projects in the country, showing a relatively close match between the potential map and the implemented structures.