Parton and her partners announced on Wednesday that they will pour $300 million into improvements for the Pigeon Forge attraction. The centerpiece will be a 300-room hotel, called the DreamMore Resort.
Dollywood President Craig Ross says DreamMore will be the first of multiple resorts on the property. It is set to open in 2015.
The family-friendly resort hotel has been Parton's dream ever since she affixed her name to the theme park 28 years ago.
The resort will also feature a fishing pond and fire pits.
Ross said the total dollar investment in the next 10 years will exceed the company's spending on Dollywood so far.
In addition to the resort, a new roller coaster will debut in 2014. The Fire Chaser Express is described as exciting, but not as intense as the Wild Eagle or Dollywood's water coaster, RiverRush. Children of elementary school age will be able to ride it.
Research by Dollywood showed executives the resort will make a difference for many people looking to vacation in the mountains.
A survey showed 80 percent of people asked about visiting the theme park, who had not yet come, indicated having a resort on the property would be important to them.
The Associated Press contributed to this report.