The fort— which was located about 10 miles (16 km) south of the dam site— was named for John Campbell, 4th Earl of Loudoun, commander of British forces in North America during this period.

This new island is separated from the mainland by the Tellico canal to the south and the main Tennessee River channel to the north.

From 1963 until the bridge's closure in July 2017, Lamar Alexander Parkway (part of U.S. Route 321) crossed the J. Carmichael Greer Bridge atop Fort Loudoun Dam and connected the area to Interstate 75 and Interstate 40 to the north and to Maryville and the Great Smoky Mountains National Park to the south.

The reservoir has 379 miles (610 km) of shoreline, 14,600 acres (5,900 ha) of water surface, and a flood storage capacity of 111,000 acre-feet (137,000,000 m3).

[3] To augment Fort Loudoun's power production capacity, water from the Little Tennessee River is diverted into Fort Loudoun Lake via a short canal extending from Tellico Reservoir a short distance upstream of the nearby Tellico Dam.

[3] In the mid-1930s, TVA drafted its "unified plan," a series of long-term goals that called for the construction of a series of dams along the Tennessee River to provide a minimum 9-foot (2.7 m) navigation channel along the entire length of the river, control flooding in the Tennessee Valley, and bring electricity to the area.

[4] The Fort Loudoun Dam project required the purchase of 16,200 acres (6,600 ha) of land and flowage rights.

However, the War Production Board gave the dam's third and fourth generators a "low priority" rating, which effectively killed funding for the Fort Loudoun extension, and the side project was abandoned.