The underground is the place where the narrator withdraws after being offended, and it is the name of his way of living: the life of someone who does not act, broods over everything in secret, and speaks almost only to himself. It is at once a place, a room, and a state.
The word appears as the title of Part One. In Chapter III, the narrator compares the man of hypertrophied consciousness to a mouse that, offended, slips into its little crack: "in his disgusting, stinking underground, our offended, beaten, and mocked mouse at once plunges into a cold, venomous rage that is, above all, eternal." There he broods over the offense for forty years and finds in it a strange pleasure.
At the end of Part One he cries "Long live the underground!" and, in the following paragraph, withdraws what he said: the best thing is not the underground, but something different, which he desires and does not find. In Part Two, the underground is also the room in which he hides from humanity, the shell where he lives with the servant Apollon. Faced with Liza, who brings living life, he wishes to return to the underground, because a life without habit oppresses him to the point that it is hard for him to breathe.