Selection of underground powerhouse location is crucial for the success of hydroelectric projects. This study presents the assessment of underground powerhouse for the Seti Nadi-3 Hydroelectric Project-87 MW in western Nepal. Geological assessments identified the dolomite rock band as favorable, leading to detailed investigations involving short drill holes to gather rock samples for laboratory testing. Numerical modeling was employed to evaluate location based on in situ stress conditions, validate rock support adequacy provided by Q-system, and ascertain sufficient vertical and lateral rock cover. The study also involved optimizing cavern orientation through rock mass joint analysis, assessing potential wedge block movements, and cross-referencing data from the World Stress Map. These analyses led to the finalization of the underground powerhouse location and confirmed that the proposed rock support system is sufficient to ensure cavern stability, with adequate vertical and lateral coverage. The findings of this study provided valuable insights into the assessment process for underground powerhouse in challenging geological environments. The results obtained were useful for optimizing the design and construction phases of the Seti Nadi-3 Hydroelectric Project, ensuring its long-term reliability and effectiveness in harnessing hydropower resources. The methodology used may provide guidance to other similar projects.