Due largely to the decline in river trade that occurred in the mid-19th century following construction of railroads in East Tennessee, Morganton was mostly deserted by the late 1960s.

Morganton was located 13.7 miles (22.0 km) above the mouth of the Little Tennessee at the river's confluence with Bakers Creek, which flows westward from Maryville.

After the American Revolutionary War, there was increasing pressure by European-American settlers who started migrating into this area and squatting on Cherokee lands.

The Overhill Cherokee had several major villages that were located upstream; for instance, Mialoquo was situated just around Wears Bend, on the opposite side of the Little Tennessee River.

[2] Ethnologist James Mooney recorded a Cherokee legend regarding blazed trees on the banks "opposite Morganton" that supposedly marked the location of hidden mines; he first published it in his volume on myths in 1900.

The community chose the name "Morganton" after Gideon Morgan (1751–1830), a Revolutionary War veteran and prominent local merchant.

[9] In 1968, the Tennessee Valley Authority reported 18 houses, a store, and a church at Morganton, all of which were to be torn down in anticipation of the construction of Tellico Dam.

In 1978, as the Tellico Dam project was stalled by litigation, University of Tennessee archaeologists conducted a test survey of the Morganton townsite.