This paper addresses application of microseismic event monitoring system in excavation of highly stressed rock mass in underground oil storage caverns. The locations and magnitudes of microseismic events were determined using a network of 12 uniaxial sensors. The results indicated that seismic events were frequently induced by blasting activities as the excavation is followed by stress redistribution in the surrounding rock mass. Since the frequency of excavation-induced seismic events usually plateaus and disappears within the first three hours after the blast, special attention should be given to events occurring continuously after the three hours within the excavation damage zone, as well as to those occurring without any specific relation to the blast. Based on the accumulated microseismic event data, evaluation criteria are established for overall stability and integrity of the underground storage caverns.