Carbon dioxide (CO2) sequestration is a technique to store CO2 into an underground formation. CO2 can cause a severe reaction with the underground formation and injection tubing inside the well. Successful CO2 storage into underground formations depends on many factors such as efficient sealing, no escaping from the storage, and minimum corrosion to injection tubing/casing. Therefore, proper planning involving thorough study and reaction kinetics of CO2 with the underground formation is indeed necessary for proper planning. The main aim and objective of this study are to investigate the effect of CO2 storage with different cap rocks such as tight carbonate and shale under simulated reservoir conditions. The samples were stored for different times such as 10, 20, and 120 days. The objectives of the study were achieved by carrying out extensive laboratory experiments before and after sequestration. The laboratory experiments included were rock compressive and tensile strength tests, petrophysical tests, and rock mechanical tests. The laboratory results were later used to investigate the reaction kinetics study of CO2 with the underground formation using CMG simulation software. The effect of injection rate, the point of injection, purity of the injection fluid, reservoir heterogeneity, reservoir depth, and minimum miscibility pressure was analyzed. In this simulation model, CO2 is injected for 25 years using CMG-GEM simulation software and then the fate of CO2 post injection is modeled for the next 225 years. The simulation results showed a notable effect on the mechanical strength and petrophysical parameters of the rock after sequestration, also the solubility of CO2 decreases with the increase in salinity and injection pressure. The results also showed that the storage of CO2 increases the petrophysical properties of porosity and permeability of the formation rock when the storage period is more than 20 days because of calcite precipitation and CO2 dissolution. A storage period of fewer than 20 days does not show any significant effect on the porosity and permeability of carbonate reservoir rock. A sensitivity analysis was carried out which showed that the rate of CO2 sequestration is sensitive to the mineral-water reaction kinetic constants. The sensitivity of CO2 sequestration to the rate constants decreases in magnitude respectively for different clay minerals. The new simulation model considers the effect of reaction kinetics and geomechanical parameters. The new model is capable of predicting the compatibility of CO2 sequestration for a particular field for a particular time.