Currently, compressed carbon dioxide (CO2) energy storage (CCES) mainly uses adiabatic compression. Although there is plenty of research on isothermal compression air energy storage, few of them discuss the potential of isothermal compressed CO2. This paper proposes a novel isothermal CCES (ICCES) system. The near-isothermal process is achieved by a liquid piston with a porous medium insert. An oil column is used to separate CO2 and water. A trans-critical CO2 cycle is proposed in this paper. The cycle includes a near-isothermal compression/expansion process and an isochoric heating/cooling process. A program is written to perform a simulation analysis of the system, and a one-dimension heat exchange model is used. The result shows that the choice of the thermodynamic path of CO2 affects the system most. The round-trip efficiency of the system is 0.7 when the initial pressure is 6.43 MPa and CO2 vapor quality is optimum. The energy density of the system is 0.65 kWh/m3, with the volume of CO2 gas storage occupying most of the system volume. Choosing a lower initial pressure increases the energy density. The liquid piston operation speed affects the power density and efficiency of the system. And the power density when storing energy is also greatly influenced by the CO2 vapor quality.