This research paper focuses on the development of a groundwater classification and grading method specifically tailored for underground space development projects. The study aims to provide a systematic approach to assess the groundwater conditions and associated risks. Based on the principle of multi-objective optimization, groundwater classification and grading method is proposed in this paper. According to the types of confined water in different foundation pits, this method accurately evaluates the impact of the changes in the confined water on the surrounding environment, and comprehensively analyzes other limiting factors such as project investment, project safety, surrounding buildings, and ecological environment, and then controls the confined water.