Water curtain systems (WCSs) are key components for the operation of underground oil storage caverns (UOSCs) and their optimization and design are important areas of research. Based on the time series monitoring of the first large-scale under-ground water-sealed storage cavern project in China, and on finite element analysis, this study explores the optimum design criteria for WCSs in water-sealed oil caverns. It shows that the optimal hole spacing of the WCS for this underground storage cavern is 10 m in order to ensure seal effectiveness. When the WCS is designed with a 10-m horizontal hole spacing and a water curtain pressure (WCP) of 80 kPa, a water curtain hole (WCH) has an influence radius of approximately 25 m. The smaller the vertical distance is between a WCH and the main cavern, the greater the water inflow into the main cavern. The vertical hydraulic gradient criterion can be satisfied when this distance is 25 m. It shows that the optimal WCP is 70 kPa, which meets sealing requirements.