After the war, Tullahoma recovered slowly, but began to prosper from its vital railroad link. During this period, Tullahoma became renowned for its educational facilities, a rarity in the area at the time. At the turn of the 20th century, Tullahoma became a popular health destination, with many spas across town. In 1939, U.S. Highway 41A was built through town, giving Tullahoma access to Nashville and Chattanooga.
In the early to mid-20th century, the area benefited from considerable federal investment and development, from the Tennessee Valley Authority to the establishment of Camp Forrest, an infantry training center and later POW camp. Tullahoma celebrated its 155th anniversary on October 4th, 2007.