Woolly Worm Festival is an annual autumn event in which thousands of contestants race woolly worms, fuzzy caterpillars also known as banded woolly bears. Since 1978, the residents of the village nestled between Carolina's two largest ski resorts have celebrated the coming of the snow season with this curious festival.

Crowds gather for the multiple race events at Banner Elk Elementary School for the Woolly Worm race which eventually culminates in an overall winner of a $500 prize pot. Races up a three-foot length of string determine which one worm will have the honor of predicting the severity of the coming winter. Twenty worms compete per event. The race consists of placing your worm on a string and watching it creep upwards to the finish line. Part of the fun is watching the antics and hearing the calls of the master of ceremonies.

The winning worm is said to forecast the weather for the coming season. A woolly worm's body has 13 segments - each corresponding to a week in winter. If a segment is light brown that means the week will be mild. If a segment is black, that means a harsh, cold week.

The event includes 140 craft vendors, food, live entertainment and rides. This family event captures the attention of 20,000 attendees looking for a good laugh and the opportunity for their Woolly Worm to make the winter forecast.