Containment structures shall remain viable even after strong ground motions to save lives and valuables. Therefore, the current study exploits the prestressing effect to mitigate seismic damage and prevent function and structural failure during seismic events. The seismic response of the studied reinforced concrete containment (RCC) structure is well captured and investigated. The results reveal that the prestressing could significantly mitigate the seismic damage and the RCC structure’s bottom is the most vulnerable region. Hence, the prestressing value might be designed to mitigate the seismic damage of the RCC structure not only to keep its integrity under overpressure. Moreover, damage assessment using different damage indices has been presented, and a modification for the Park-Ang damage index has been formulated. Furthermore, a new formula has been proposed to predict the RCC structure’s damage ratio accurately, and a new classification for the damage states has been developed to identify the performance level.