The global warming crisis and environmental challenges necessitate the transition to clean energy and the development of storage technologies. Specifically, underground storage of energy carriers, combined with electricity generation from renewable sources, offers a practical solution to energy supply-demand imbalances. Although hydrogen play a critical role as an energy carrier during the energy transition, its large-scale application is limited by low energy density, strict temperature and pressure requirements and safety concerns. In contrast, ammonia, as a carbon-free alternative to hydrogen, offers significantly higher energy density, approximately 1,150 times that of hydrogen under ambient conditions, making it highly suitable for storage in liquid form in underground structures such as salt caverns. Given Iran’s substantial ammonia production capacity, about 6.5 million tons per year, this paper presents the techno-economic feasibility of underground storage of a portion of this ammonia and practical considerations of underground ammonia storage (UAS) in Iran, evaluating its potential role in the country’s energy transition. The study developed an integrated framework including technical modeling and risk-based economic analysis to examine the large-scale production, transportation, storage and consumption of ammonia. After evaluating potential underground structures, the Nasrabad salt dome was identified as an optimal candidate due to its high storage capacity and proximity to major consumption centers. A ten-year operational scenario involving injection and production cycles was then designed to meet the energy needs of Isfahan Province. Economic assessment of the levelized cost of storage (LCOS) was conducted for gray, blue, and green ammonia scenarios. Results indicate that the designed system of Nasrabad salt dome can store and produce approximately 1.445 million tons of ammonia annually, offsetting the energy imbalance of Isfahan province and satisfying 12.9% of its energy demand. The LCOS for stored ammonia was estimated at $0.40, $0.48, and $0.57 per kWh (equivalent to $2.47, $2.96, and $3.56 per kg of ammonia) for gray, blue, and green ammonia, respectively. A sensitivity analysis revealed that the cost of ammonia production and cracking (to hydrogen) for consumption have the most significant impact on the final LCOS. These findings underscore Iran’s significant potential for developing underground ammonia storage systems as a sustainable solution for energy security, carbon emission reduction and renewable energy integration. Nevertheless, the essential precondition for the economic realization of this technology on a national scale is a significant reduction in the levelized cost through technical optimization of the production chain and supportive policies for low-carbon energy carriers.