The dam impounds the TVA Watauga Reservoir of 6,430 acres (2,600 ha),[2] and its tailwaters feed into Wilbur Lake.

In the early 1940s, the Tennessee Valley Authority, which had assumed oversight of flood control operations in the Tennessee River watershed in the previous decade, suggested a dam at the Cardens Bluff site to provide badly needed flood storage and help with the region's World War II energy demands.

In October 1942, the U.S. War Production Board ordered TVA to halt the Watauga project, deeming it unnecessary for the nation's wartime needs.

TVA spent several weeks securing the dam site and tunnel, and the project was set aside until the end of the war.

[3] Many details went into the preparation of closing off the dam, including but not limited to, pouring concrete over the plug, relocating roads, construction of bridges and culverts, and removal of different debris and rocks.

[6] The Old Crow Medicine Show song "Half Mile Down", on the 2012 album Carry Me Back, is about the flooding of the narrator's home town (Butler, Tennessee) due to the construction of the dam.