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This study aims at identifying suitable sites for underground or subsurface dams using a spatial multicriteria evaluation (SMCE) for water supplies in an arid watershed in southwestern Iran. Specific constraints and three groups of criteria were used in developing a spatial decision model. Constraints included slope, fault, land use, and geology. Site characteristics were classified based on slope, geomorphology, infiltration, precipitation, geology, and distances from roads, from rock materials sites, from faults and springs, from rivers and streams, and from various land uses. A criteria tree was designed and standardized using Boolean logic and fuzzy membership on factors. Factors were weighed by both ranking and direct methods. Finally, the composite index map (CIM) was used to identify three best sites. With valley shape consideration, Site2 was the most suitable for construction of a subsurface dam. Interpretation of valley profile, optimum decisions on subsurface dams, and multicriteria for site selection can be used in water resource planning.