In this study, the usefulness of underground dam as a means for the sustainable development of groundwater, and its performance in the management of groundwater resources were analyzed. The fully integrated SWAT-MODFLOW was applied to the Ssangcheon watershed in Korea to evaluate the effectiveness of groundwater dam construction. After construction, the groundwater level raised in the upstream area of groundwater dam while lowered in the downstream area. Also, it is shown that the exchange rate of river-aquifer interactions increased in the upper area of the dam. Since the storage capacity of the aquifer largely increased in the upper area of the dam, the exploitable groundwater could be greatly increased as much. This study demonstrated that a groundwater dam was a very useful measure to increase the available storativity of groundwater aquifers. It also represented that the combined analysis using SWAT-MODFLOW was helpful for the design and opeation of groundwater dam in the Ssangcheon watershed.