To quantitatively evaluate excavation damage effects on the mechanical response of underground compressed air energy storage caverns, an analytical elastic stress model is established for the lining-surrounding rock structure considering initial damage in surrounding rock. First, based on insitu sonic test data, an exponential function is adopted to describe the radial nonlinear attenuation of the rock mass damage factor and deformation modulus induced by drilling-and-blasting excavation. Subsequently, under the plane strain assumption and axisymmetric conditions, a governing differential equation with variable coefficients for radial displacement is derived. Through variable transformation, the equation is converted into a standard confluent hypergeometric equation, yielding Kummer function analytical solutions for the stress fields of unlined and lined cases. A finite element model considering the nonlinear characteristics of the excavation damage zone (EDZ) is established using Abaqus. The insitu stress equilibrium is achieved by presetting the initial stress field in the geostatic step, thereby verifying the validity of the proposed analytical theory. The results show that: (1) The radial attenuation of rock mass modulus within the EDZ disrupts the monotonic stress distribution given by the classical elastic solution. The maximum tangential stress shifts from the cavern wall to the deep rock mass (located 0.2 m from the cavern wall in the numerical example), presenting a distinct “off-wall peak” feature. (2) The installation of lining markedly alters the stress state of surrounding rock, effectively reducing the principal stress difference and tensile stress level and preventing shear or tensile failure of surrounding rock. (3) The proposed analytical model efficiently determines the maximum safe operating pressure of the cavern (17.5 MPa in the numerical example), provided that both the lining and surrounding rock remain elastic.