Underground dams have recently been considered as hydrological structures for the development of water resources, especially in the dry regions of Iran. In this investigation along with the basic studies and the aquifer flow modeling, the probable hydrogeological effects of an underground dam are investigated. The proposed place for the Ganjeh Underground Dam is Chehel-khaneh Aquifer located in Freydan, Isfahan province. In this study, climatological and hydrological studies, exact geological, geophysical and hydrogeological researches, and a completion of the required data based on different statistical methods have been utilized to examine the feasibility of application of PMWIN, an efficient model for simulation of fluid flow and solute transport in porous media for the Chehel-khane Aquifer modeling. Following the verification of the model, future behavior of the Chehel-Khaneh Aquifer, quantity of stored water, increase vs. decrease in yields of wells and Qanats are assessed and analyzed for various configurations of the underground dam. According to the influence of hydrological constructions on the water resources balance, groundwater balance is calculated and analyzed for the Chehel-Khaneh and Bouein (downstream aquifer) aquifers and the role of the underground dam on the fall of the level of water resources downstream is investigated. According to the findings of the research, optimum height of crest of the underground dam is 2290 m.s.l. Increased storage of the aquifer as a result is 0.47 Mm3 with the discharge of river, wells and Qanats significantly increased. Moreover, Ganjeh Dam would not exert any undesirable effect either on Ganjeh-Daran Road or Ganjeh Village. The effective radius of Ganjeh Dam on downstream aquifer is estimated as less than 700 meters. Due to the construction of the dam, there will arise a 6 meter decrease in water table of the downstream aquifer at the influenced regions.