A strain of bird flu was found in a chicken breeder flock on a farm used by Tyson Foods Inc.
All of the 73,500 chickens at the farm will be killed and none of them will be used for food.
Tyson says it is "responding aggressively", working with officials to contain the virus and plans on meeting all customers' needs.
Other Asian nations including Japan and South Korea have also placed restrictions on US-origin poultry products because of the Tennessee outbreak.
Tennessee's Department of Agriculture is not identifying the farm where the chickens were destroyed, saying only that it is located in the state's Lincoln County, which is just west of Chattanooga and boarders Alabama. Tyson said that it did not expect disruptions to its chicken business.
At this point, there have been no reported cases of human bird flu infection in the US though.
A low-pathogenic bird flu strain has been detected in a Jennie-O Turkey Store operation in Barron, Wis., marking the second bird flu case in a US commercial operation this week. Officials are monitoring flocks within the quarantined area and "depopulating" the infected flock.
The company said that out of an abundance of caution, all Tyson-owned flocks are tested for avian flu before they leave a farm, and the company knows the results before they're processed. Wild waterfowl can harbor the avian influenza virus without getting sick.
The farmers of the affected farm have been advised to bury the bodies of the dead chicken, to avoid spreading of the virus.
France, which has the largest poultry flock in the European Union, has reported outbreaks of the highly contagious H5N8 bird flu virus. Trucks must wait 72 hours to enter the company's property if they come from an area with avian flu, up from 24 hours, he said.
In the United Kingdom, an outbreak of bird flu last week led to the culling of more than 55,000 ducks believed to be infected.
Tennessee has more than 1,650 commercial broiler and breeding operations on more than 550 family farms, ranking 13th nationally in broiler production, the Tennessee Poultry Association told the Associated Press.