An underground power station is a type of hydroelectric power station constructed by excavating the major components (e.g. machine hall, penstocks, and tailrace) from rock, rather than the more common surface-based construction methods.

One or more conditions impact whether a power station is constructed underground. The terrain or geology around a dam is taken into consideration, as gorges or steep valleys may not accommodate a surface power station. A power station within bedrock may be less expensive to construct than a surface power station on loose soil. Avalanche-prone valleys often make a surface station unfeasible as well. After World War II, large hydroelectric power stations were placed underground more often in order to protect them from airstrikes.

Often underground power stations form part of pumped storage hydroelectricity schemes, whose basic function is to level load: they use cheap or surplus off-peak power to pump water from a lower lake to an upper lake. During peak periods (when electricity prices are often high), the power station generates power from the water held in the upper lake.