To investigate the relationship between deformation, failure, and damage during the rock loading process, uniaxial compression tests were conducted on sandstone specimens. The characteristics of volumetric deformation and energy dissipation throughout the compression failure process were studied. Damage in the specimens was characterized using three physical parameters: crack volumetric strain, axial stiffness, and dissipated energy density. The results indicate that the loading process can be divided into five stages based on the crack volumetric strain. The instantaneous Poisson’s ratio showed an increasing trend throughout all stages except the crack closure stage, with accelerated increase observed upon entering the unstable crack growth stage. Specimen dilatancy occurred during the stable crack growth stage. Radial cracks in their initial formation phase had minimal impact on the specimen’s axial stiffness; a rapid decrease in axial stiffness only began during the unstable crack growth stage. Using axial stiffness and crack volumetric strain fails to adequately define damage during the crack closure and elastic stages. In contrast, characterizing specimen damage using dissipated energy density effectively reflects the damage evolution throughout the entire loading and failure process.