Abstract: Microscopic mechanism of operating loss in underground gas storage (UGS) plays a key role in investigating the damage of water intrusion to the reservoir during the cyclic injection-production operation of water-drive gas reservoir UGS. Considering the effect of the moving back and forth of the water during UGS high-speed injection-production operation, UGS cyclic injection-production simulation NMR and microscopic visualization simulation technology were used jointly to investigate the distribution and migration characteristics of two-phase fluid in microscopic pores of UGS, analyze the utilization characteristics of underground reservoir space quantitatively and evaluate the microscopic mechanism and main controlling factors of operating loss in the water-drive gas reservoir UGS. It is indicated that the gas-water transition zone is the core region of operating loss during the injection-production operation of water-drive gas reservoir UGS and the watergas interlocking is in close relation with UGS injection-production loss. The research results provide the technical support and important basis for the optimization of injection-production operation scheme of water-drive gas reservoir UGS.