Tellico Reservoir was planned as an extension of nearby Fort Loudoun Reservoir. Tellico Dam generates no power, but serves to divert water through a short canal into Fort Loudoun, linking the two reservoirs in their functions of flood reduction and navigation.
The two linked reservoirs help regulate flooding downstream, especially at Chattanooga. The Tellico canal also allows barges to enter the Little Tennessee River without a lock, thus significantly increasing commercial barge operations in the Valley.
Tellico is known for recreation, and includes several areas that feature boat ramps, day-use areas, fishing and campgrounds. The reservoir offers excellent trout and bass fishing.
On Tellico’s banks is a reconstruction of the original Fort Loudoun, which was built by the British during the French and Indian War. It was named for John Campbell, the fourth Earl of Loudoun, commander-in-chief of the British forces in North America at the time. Another nearby historic attraction is the Sequoyah Birthplace Museum, honoring the genius who invented the Cherokee alphabet.