In order to reveal the influence of groundwater on surrounding rock stability in deep underground engineering and the water-induced deterioration mechanism of sandstone, uniaxial compression tests were conducted on natural and saturated sandstone specimens combined with acoustic emission (AE) and scanning electron microscopy (SEM). The effects of water on mechanical properties, energy evolution, crack propagation and microstructure were systematically analyzed. Results show that water significantly reduces mechanical parameters, suppresses energy storage and accelerates energy dissipation. Compared with natural sandstone, saturated sandstone exhibits prolonged initial damage and faster damage acceleration, with large-scale cracks more prone to early penetration. AE multifractal characteristics show pronounced anomalies prior to failure. The failure mode transforms from shear-dominated to shear-tensile mixed failure with more complex failure surfaces. SEM observations reveal that water erosion intensifies pore development and fragmentation degree. The research provides theoretical reference for predicting and preventing rock mass instability in deep underground engineering.