Nicknamed "The Hiwassee Route" for a scenic portion of the railroad along the Hiawassee River, the Atlanta, Knoxville and Northern Railway was chartered in 1896 as a successor to the Marietta and North Georgia Railway, which had entered receivership in 1891. It was part of a railroad system that ran from the community of Elizabeth near Marietta, Georgia, northward to Murphy in far western North Carolina, and to Delano just south of Etowah in southeast Tennessee.
Originally incorporated in 1854 as the Ellijay Railroad after the town of Ellijay, Georgia, it was renamed the Marietta, Canton & Ellijay Railroad, and finally the Marietta and North Georgia Railroad, finally beginning construction in 1874. Beginning at the Western & Atlantic Railroad in Elizabeth (now within Marietta city limits), it connected through Blackwells, Noonday, , Lebanon/Toonigh, Holly Springs, and Canton, taking until 1879 to do so. It continued to Marble Cliff in 1883, and to Ellijay in 1884. In 1887, it was completed to Murphy, and merged with the Georgia and North Carolina Railroad, causing another slight name change to the Marietta and North Georgia Railway, rather than the previous "Railroad".
It was converted from three-foot (775mm) narrow gauge to standard gauge as far north as Blue Ridge, Georgia in 1890, and from there to Murphy in 1897. This also allowed a continuous route from Atlanta, Georgia to Knoxville, Tennessee, with the completion of a route southward from the wye at Etowah/Delano by the Knoxville Southern Railroad, actually a subsidiary of the M&NGR. This route runs eastward along the Hiwassee River to Farner, Tennessee, then south along the Tennessee side of the North Carolina state line, through Ducktown, then the twin towns of Copperhill, Tennessee and McCaysville, Georgia, then through Epworth before meeting the existing line at Blue Ridge.