THE ORIGIN OF CAMP NELSON is closely linked with President Lincoln's desire to free pro-Union sections of East Tennessee from Confederate control. Lincoln had been heavily lobbied by Tennessee Unionists and their supporters since Tennessee's secession in June 1861 to send Federal troops into this region. In fact, as early as July 1861, Lincoln had ordered an advance into East Tennessee but logistical and strategic factors prevented any movement until 1863.

In the Spring of 1863 the new Army of the Ohio was organized and placed under the command of Major General Ambrose E. Burnside with explicit orders to invade East Tennessee. To assist this campaign Burnside, who had his headquarters in Cincinnati, ordered his engineers to find a suitable location in Central Kentucky to construct a large fortified supply depot and encampment. The locale chosen in June 1863 was the high plateau above the Kentucky River at the southern tip of Jessamine County. The depot and encampment established there was officially named Camp Nelson on June 12, 1863, after the late Major General William "Bull" Nelson, who founded Camp Dick Robinson, the first Union recruitment camp in Kentucky.

The location in southern Jessamine County was chosen for a number of strategic and logistical reasons: First, the position was naturally defensible. An area of approximately 4,000 acres was surrounded on the western, southern, and eastern sides by the deeply entrenched Kentucky River and Hickman Creek. Both of these streams are enclosed by nearly vertical limestone walls, the palisades, which extend up to 500 feet in height. The only exposed portion of the camp was its northern end, and here a line of fortifications and entrenchments was constructed. The defensive nature of the camp's location was often commented on by soldiers and observers. To quote Captain Theron E. Hall of Holden, Massachusetts, Camp Nelson's long-time Chief Quartermaster:
"It is naturally fortified on three [3] sides by the river and creek, the cliffs of which average four hundred feet high and perpendicular. Across the narrow neck from the river to the creek are fortifications of a most formidable character connected by rifle pits and protected by abatis. Every approach to the camp is commanded by mounted guns and so far as its natural defenses are concerned it is one of the most impregnable points in the country."

Some soldiers also commented on the scenic beauty of the palisades. For instance, Sergeant Oliver Haskell of the 71st Indiana stated that:
"the hills or the small mountains along the river where it crosses it at Hickman's Bridge are magnificent. I was more interested in this scenery than any I have seen in Ky. The gradual slopes together with the perpendicular sides of the mountains, the ledges of rock which hang over the road far above it, the trees which cover the rocks and mountains all strike the individual with wonder and delight and leaves an impression that there is a great and powerful being which created this universe and formed these things."