The Gatlinburg Utilities Department provides the City's water supply. Gatlinburg continues to achieve a high rating in water quality. Water is taken into the system from the West Prong of the Little Pigeon River watershed at the Department's Water Treatment Plant. The water entering the system at the plant is naturally very pristine, due to the undeveloped Great Smoky Mountains National Park upstream. The City also obtains water for its customers through the City of Pigeon Forge.

The Department Is also responsible for the Wastewater System in Gatlinburg. All wastewater is transported through the sewer system to the Wastewater Treatment Plant. This plant receives wastewater and then treats, filters, and refines it and making it pure enough to release back into the stream.

The Wastewater Treatment Plant is nearing the completion of an expansion project, which will increase capacity by 50 percent. The increased capacity for the Plant, which is being completed without expanding the footprint from the existing facility, will allow the current treatment of 3 million gallons per day to be increased to 4.5 million gallons per day. This $25 million investment Project began in early 2022 and is expected to be completed in late 2024.