The Watauga River rises in Watauga County, North Carolina, a mountainous county in western North Carolina along the Tennessee state line. Crossing into Johnson County, Tennessee it is soon impounded by the Tennessee Valley Authority's Watauga Dam. This impoundment receives two important tributaries, the Elk River and Roan Creek, whose former valley of bottom land forms a very large embayment of Watauga Lake. The lake is bridged by Tennessee State Route 67 just as the watercourse enters Carter County. The Appalachian Trail crosses the Watauga River at Watauga Dam. The Watauga Dam product diverts much of the river flow here into a tunnel. The water flows out through turbines at the end of this tunnel, generating hydroelectric power.
The Watauga flows basically north and then west into the Carter County seat of Elizabethton, where it receives the flow of the Doe River.