The greatest advantage of underground engineering facilities lies in energy saving and safety. Energy-saving comes from the underground constant temperature environment, whereas safety comes from the closed environment as well as relatively insignificant artificial interference. The development of urban underground space in the hilly areas of South China has a broad prospect of utilization. This paper reports the preliminary results of the project on the development and utilization prospects of urban underground space, including the scientific problem as to how to maintain excellent ecological environment, the classification and characteristics of underground space, the investigation contents and investigation methods of usable underground space. Aimed at tackling the problems existent in the exploitation and utilization of urban underground space, the authors put forward some suggestions on the development and utilization of urban underground space in the hilly areas of South China.