Underground space evaluation is a crucial step in developing underground spaces. Over the past two decades, several Chinese cities have conducted underground space suitability evaluations on different scales. However, due to unclear evaluation semantics, disparities in geological conditions, and technical personnel, these cities have used different evaluation indicators and methods for the evaluation process, which has restricted the promotion and application of the evaluation results. This paper proposes a system theory-based approach to evaluate the geological suitability for underground space development. It suggests that the evaluation of the system’s ability to maintain a relative balance under external disturbances is critical, and it identifies specific evaluation elements and contents to address this objective. The paper focuses on the key issues of hierarchy organization, grain selection in the evaluation index system, method selection, optimization, and verification of the evaluation index system, which ultimately leads to the construction of a set of evaluation method procedures. The practice of Jiangdong New District in Haikou validates the method of dividing the first criterion layer into "restriction level, security level, cost level" and calculating weight by "composite iterative entropy weight method". This approach, which reflects the guidance of professional knowledge and the objectivity and differentiation of data, can provide guidance for the geological suitability evaluation of underground space development in coastal plain cities in China.