As it crosses into Tennessee, US 321 enters the Cherokee National Forest, and continues westward through the rugged valley between Pond Mountain on the south and Watauga Lake on the north. The highway passes numerous campgrounds, boat launches, and other lake-related recreational areas as it winds its way along the shores of the lake. South of Butler, the highway joins SR 67, which enters from the Mountain City area to the northeast. The Appalachian Trail crosses US 321 at its intersection with Shook Gap Road, just before the highway exits the national forest. At Hampton, US 321 intersects US 19E, and the two highways run concurrently northward into Elizabethton.