The highway starts at the Tennessee state line in southern Monroe County on the road where going south, it continues as Tennessee State Route 51.

[3] Since 2002, the first 8.5 miles (13.7 km) of KY 163, along with the entire Tennessee Route 51 corridor, and several other routes, is part of the designated route of the annual Roller Coaster Yard Sale, an outdoor second-hand yard sale event that takes place in the first weekend of October.

[4][5] The specified section of KY 163 is also part of the Cordell Hull Scenic Byway, one of Kentucky's Scenic Byway routes.

In addition to KY 163's current alignment through Monroe and southern Metcalfe Counties, KY 163 ran an additional 10 miles (16 km) to end at a junction with KY 70, another major state route, at Sulphur Well.

KY 163's northern terminus was relocated to its current location when US 68 was rerouted onto this route during the 1940s.