[Objective] This study systematically investigates the synergistic interaction between the lining structure (comprising the steel liner, concrete lining, and flexible sealing layer) and the surrounding rock mass of compressed air energy storage (CAES), and proposes optimization methods for key design parameters to enhance the technical feasibility and economic viability of such storage caverns under broader geological conditions. [Methods] Comprehensive finite-element simulations were performed to evaluate the effects of critical variables, including surrounding rock mass grade, lining parameters (thickness, concrete strength, and reinforcement ratio), and sealing layer characteristics (thickness, structural form, and material properties), on the structural mechanical responses (stress distribution, strain evolution, and cracking behavior). In particular, to address the common engineering challenge of concrete lining cracking, this study quantitatively assessed the risk of crack indentation failure in the flexible sealing layer. On this basis, a novel thickness design criterion for the rubber sealing layer based on an anti-indentation criterion was proposed for the first time. [Results] (1) Baseline design suitability and geological constraints: A composite structure consisting of a 24-mm-thick Q235 steel liner and a 500-mm-thick C40 concrete lining demonstrated sufficient capacity to meet the sealing and strength requirements for a storage cavern at a burial depth of 200 m in Grade Ⅰ and Grade Ⅱ surrounding rock masses. However, in Grade Ⅲ surrounding rock mass, the maximum tensile stress in the steel liner exceeded the yield strength of Q235 steel, indicating a potential risk of structural failure. In Grade Ⅳ and Grade Ⅴ surrounding rock masses, neither the sealing structure nor the surrounding rock provided the conditions required for constructing a storage cavern that was both safe and economically feasible. (2) Effect of lining reinforcement: Simply increasing the lining thickness or improving the concrete grade had a negligible effect on enhancing the structural stress-deformation behavior. In contrast, reinforcement measures effectively controlled the crack width of the lining. With a reinforcement ratio of 0.5%, the maximum crack width was controlled within 2 mm. Notably, as the reinforcement ratio increased from 0.5% to 1.5%, the maximum crack width decreased to below 1.0 mm, and the number of cracks within the 0.5-1.0 mm range decreased. However, this was accompanied by a redistribution effect, where the number of fine cracks (0.1-0.5 mm) increased significantly from 20 to 38, suggesting that reinforcement effectively dispersed concentrated macro-cracks into distributed micro-cracks. (3) Steel liner optimization and groundwater challenges: Increasing the steel liner thickness to 30 mm still failed to meet the strength requirements; further thickening produced diminishing returns while significantly increasing construction costs. Additionally, in areas with abundant groundwater, a 24-mm-thick steel liner provided limited resistance, withstanding an external water pressure of only 0.23 MPa. If the external water pressure reached 1.0 MPa, the critical thickness required to prevent buckling instability would exceed 100 mm, making the design economically infeasible. (4) Innovative structural forms and sealing layer criterion: Adopting segmented or corrugated steel liner structures could decouple liner deformation from the surrounding rock mass, reducing tensile stress and strain by more than 70%. Regarding the rubber sealing layer, its circumferential strain under an internal pressure of 10 MPa remained far below the material limit. However, to prevent the rubber from being extruded into cracks and causing indentation failure after the lining cracks, it was determined that the thickness of the rubber sealing layer should not be less than 6 mm. [Conclusion] Constructing CAES caverns in Grade Ⅲ surrounding rock mass with sufficient burial depth is feasible, provided that optimized steel liners, reinforced concrete lining for crack-width control, and a flexible sealing layer of adequate thickness are employed to ensure sealing reliability and overall stability. Since reinforcement cannot completely eliminate lining cracking, the engineering objective should shift towards controlling the crack width within an allowable range that prevents indentation failure of the sealing layer. For areas with active groundwater, relying solely on increasing steel liner thickness to resist external water pressure is uneconomical. Instead, proactive waterproofing or drainage measures around the cavern are necessary. Most significantly, this study proposes, for the first time, a quantitative design criterion for rubber thickness to prevent crack indentation failure. This contribution provides direct design guidance for engineering practice, thereby improving the technical adaptability and safety of lined rock cavern gas storage facilities under complex geological conditions.