The Tennessee Valley Authority Kingston coal ash spill in December 2008 deposited approximately 4.1 million m3 of fly ash and bottom ash into the Emory and Clinch River system (Harriman, Tennessee, U.S.A.). The objective of this study was to investigate the impact of the ash on surface water and sediment quality over an eighteen month period after the spill, with a specific focus on mercury and methylmercury in sediments. Our results indicated that surface water quality was not impaired with respect to total mercury concentrations. However, in the sediments of the Emory River near the coal ash spill, total mercury concentrations were 3- to 4-times greater than sediments several miles upstream of the ash spill. Similarly, methylmercury content in the Emory and Clinch River sediments near the ash spill were slightly elevated (up to a factor of 3) at certain locations compared to upstream sediments. Up to 2% of the total mercury in sediments containing coal ash was present as methylmercury. Mercury isotope composition and sediment geochemical data suggested that elevated methylmercury concentrations occurred in regions where native sediments were mixed with coal ash (e.g., less than 28% as coal ash in the Emory River). This coal ash may have provided substrates (such as sulfate) that stimulated biomethylation of mercury. The production of methylmercury in these areas is a concern because this neurotoxic organomercury compound can be highly bioaccumulative. Future risk assessments of coal ash spills should consider not only the leaching potential of mercury from the wastes but also the potential for methylmercury production in receiving waters.