The dam was named for the Cherokee, a Native American tribe that controlled much of East Tennessee when the first European settlers arrived in the mid-18th century.

The dam was built immediately downstream from a point where Mossy Creek, which flows northeastward from Jefferson City, joins the Holston to create a T-shaped formation.

Cherokee Lake stretches for 59 miles (95 km) from the dam to the John Sevier Combined Cycle Plant just south of Rogersville, Tennessee, and includes parts of Jefferson, Grainger, Hamblen, and Hawkins counties.

In 1940, with World War II raging across Europe, the United States government saw an urgent need to strengthen its military and defense infrastructure.

The project also required the relocation of 875 families, 51 cemeteries, and a historical tavern at Bean Station (which was the only major community that was flooded).

[1] While Cherokee's primary purpose is hydroelectric power production, like other TVA dams it also helps control flooding, which was rampant in the Tennessee Valley before the 1930s.

The Tennessee Wildlife Resources Agency regularly stocks the lake with walleye, crappie, and hybrid striped bass for recreational fishing.