The development of underground space in Shanghai has entered a period of rapid development since the 1990s, and the construction of sponge cities in Shanghai has also been steadily advancing in recent years. However, there is a lack of relevant research on how to embody the concept of sponge city in underground space development and systematically promote sponge city. Based on the strategic system of water ecology, water environment, and water safety in the concept of sponge city, the problems of rainwater infiltration process, groundwater protection, and guidance of underground drainage facilities in the development of underground space are analyzed. A preliminary development and utilization model of underground space in Shanghai based on the concept of sponge city is proposed. Meanwhile，suggestions are put forward to improve the technical system of underground space development and utilization and practice the concept of ecological civilization.