Based on the mechanisms of gravity displacement, miscibility, viscosity reduction, and imbibition in natural gas flooding, an integrated reservoir construction technology of oil displacement and underground gas storage (UGS) is proposed. This paper systemically describes the technical connotation, site selection principle and optimization process of operation parameters of the gas storage, and advantages of this technology. By making full use of the gravity displacement, miscibility, viscosity reduction, and imbibition features of natural gas flooding, the natural gas can be injected into oil reservoir to enhance oil recovery and build strategic gas storage at the same time, realizing the win-win situation of oil production and natural gas peak shaving. Compared with the gas reservoir storage, the integrated construction technology of gas storage has two profit models: increasing crude oil production and gas storage transfer fee, so it has better economic benefit. At the same time, in this kind of gas storage, gas is injected at high pressure in the initial stage of its construction, gas is injected and produced in small volume in the initial operation stage, and then in large volume in the middle and late operation stage. In this way, the gas storage wouldn’t have drastic changes in stress periodically, overcoming the shortcomings of large stress variations of gas reservoir storage during injection-production cycle due to large gas injection and production volume. The keys of this technology are site selection and evaluation of oil reservoir, and optimization of gravity displacement, displacement pressure, and gas storage operation parameters, etc. The pilot test shows that the technology has achieved initial success, which is a new idea for the rapid development of UGS construction in China.