Originally named Fort Caswell, Fort Watauga was constructed near the Sycamore Shoals of the Watauga River near present-day Elizabethton. Settlement in the Watauga Valley had begun before 1768, despite an earlier proclamation by British authorities forbidding encroachment into Native American territory. When a 1770 survey defined the boundary line, the Watauga settlement was clearly inside Cherokee lands.
The Wataugans refused to leave their settlement, and in 1772 James Robertson and John Boon negotiated a lease with the Cherokee for their lands along the Watauga. Following this agreement, the settlers formed the Watauga Association for the purposes of self-government–an action taken to protect property rights, not as a break with the British government.
After the outbreak of the American Revolution in 1775, the Wataugans feared British instigation of Cherokee attacks on the frontier settlements. To protect against such attacks, the settlers constructed several forts and named the one at the Watauga settlement Fort Caswell in honor of the Revolutionary governor of North Carolina. There are no contemporary descriptions of the fort, but archaeological testing of the site has shown that it was an irregularly shaped enclosure consisting of palisade walls probably joining blockhouses or other buildings.
In July 1776 Old Abram of Chilhowee led a group of Cherokees in an attack on the Watauga settlement. Repulsed in the initial attack, the Cherokees besieged the fort for two weeks. By the time reinforcements arrived from the Holston settlement, the Cherokees had already abandoned the siege. In 1780 the Overmountain Men gathered at the Sycamore Shoals of the Watauga before marching to the battle of Kings Mountain.