In this paper, the structural responses and failure characteristics of a new type of water conveyance tunnel lining structure subjected to reverse fault conditions were numerically investigated by considering multiple loads and interaction separation modes between different structural layers. This study proposes a new evaluation standard for the safety level of the damage state of the composite lining water conveyance tunnel. It also discusses the influences of fault dislocation displacement (Δf), dip angle (β), and the mechanical properties of the surrounding rock in the fault fracture zone on the water conveyance tunnel response and damage. The results indicate that the buckling failure of the steel tube under axial compression is the dominant failure mode of the composite lining structure. With increasing fault dislocation displacement, the axial compressive strain and circumferential shear strain of the composite lining are most severely damaged on the sliding plane. With decreasing fault dip angle, the axial compressive strain of the composite lining weakens, while the bending and shear strains increase. The increase in rock stiffness in the fault fracture zone reduces the damage scope but increases the composite lining structural damage severity. Overall, the numerical results of this study provide a better understanding of the failure mode and damage process of composite lining water conveyance tunnels under reverse fault conditions; therefore, this study can serve as a reference for composite lining structure disaster assessments.