| x | ANNUAL      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF      1934 |
|---|-----------------------------------------------------------------------------------------------|

|  ̈ | TRANSITION      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF      1934 |
|--------|----------------------------------------------------------------------------------------------------|

|   | For      transition period from      __________  to  __________ |
|--------|-------------------------------------------------------------------------------------|

| Tennessee                     | 62-1173944                                |
|-------------------------------|-------------------------------------------|
| (State      of Incorporation) | (I.R.S.      Employer Identification No.) |

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| ITEM      15. | EXHIBITS      AND FINANCIAL STATEMENT SCHEDULES |
|---------------|-------------------------------------------------|

| (a)    | The      following documents are filed as part of this report:                                                                                                                                                                                             |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                       |
| (1)    | Financial      Statements                                                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                       |
|   | The      following report and consolidated financial statements of Cornerstone and      Subsidiaries are included in Item 8:                                                                                                                          |
|   |                                                                                                                                                                                                                                                       |
|   | Report      of Independent Registered Public Accounting Firm                                                                                                                                                                                               |
|   | Consolidated      Balance Sheets as of December 31, 2009 and 2008                                                                                                                                                                                          |
|   | Consolidated      Statements of Operations for the years ended December 31, 2009, 2008 and      2007                                                                                                                                                       |
|   | Consolidated      Statement of Changes in Stockholders’ Equity for the years ended December      31, 2009, 2008 and 2007                                                                                                                             |
|   | Consolidated      Statements of Cash Flows for the years ended December 31, 2009, 2008 and      2007                                                                                                                                                       |
|   | Notes      to Consolidated Financial Statements                                                                                                                                                                                                            |
|   |                                                                                                                                                                                                                                                       |
| (2)    | Financial      Statement Schedules:                                                                                                                                                                                                                        |
|   |                                                                                                                                                                                                                                                       |
|   | Schedule      II: Valuation and Qualifying Accounts                                                                                                                                                                                                        |
|   |                                                                                                                                                                                                                                                       |
|   | All      other schedules for which provision is made in the applicable accounting      regulation of the Securities and Exchange Commission are not required      under the related instructions or are inapplicable and therefore have been      omitted. |
|   |                                                                                                                                                                                                                                                       |
| (3)    | The      following documents are filed or incorporated by reference as exhibits to      this report:                                                                                                                                                       |

| Exhibit No.  |   | Description                                                                                                                                         |
|--------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------|
|         |   |                                                                                                                                                |
| 3.1          |   | Amended      and Restated Charter of Cornerstone Bancshares, Inc., as amended      (1)                                                              |
| 3.2          |   | [Intentionally      Omitted]                                                                                                                        |
| 3.3          |   | Amended      and Restated Bylaws of Cornerstone Bancshares, Inc. (3)                                                                                |
| 4            |   | The      right of securities holders are defined in the Charter and Bylaws provided      in exhibits 3.1, 3.2 and 3.3 respectively.                 |
| 10.1*        |   | Cornerstone      Bancshares, Inc. Statutory and Nonstatutory Stock Option Plan.      (4)                                                            |
| 10.2*        |   | Cornerstone      Bancshares, Inc. 2002 Long-Term Incentive Plan. (5)                                                                                |
| 10.3*        |   | Cornerstone      Bancshares, Inc. 2004 Non-Employee Director Plan. (6)                                                                              |
| 10.4*        |   | Cornerstone      Community Bank Employee Stock Ownership Plan. (7)                                                                                  |
| 10.5*        |   | Key      Executive and Employment Agreement with Nathaniel F. Hughes, as amended.      (8)                                                          |
| 10.6*        |   | Key      Executive and Employment Agreement with Jerry D. Lee, as amended.      (9)                                                                 |
| 10.7*‡ |   | Separation      Agreement dated November 12, 2009, by and among Gregory B. Jones,      Cornerstone Community Bank and Cornerstone Bancshares,  Inc. |
| 14           |   | Code      of Ethics. (10)                                                                                                                           |
| 21#          |   | Subsidiaries      of the registrant.                                                                                                                |
| 31.1#        |   | Certification      of principal executive officer.                                                                                                  |
| 31.2#        |   | Certification      of principal financial officer.                                                                                                  |
| 31.3‡  |   | Certification      of principal executive officer.                                                                                                  |
| 31.4‡  |   | Certification      of principal financial officer.                                                                                                  |
| 32#          |   | Section      906 certifications of chief executive officer and chief financial      officer.                                                        |
| 32.1‡  |   | Section      906 certifications of chief executive officer and chief financial      officer.                                                        |

----

|   | * | Indicates      a management contract or compensatory plan or  arrangement. |
|--------|---|----------------------------------------------------------------------------|

|   | # | Previously      filed with the registrant’s Form 10-K filed on March 31,    2010. |
|--------|---|-----------------------------------------------------------------------------------------|

|   | ‡ | Filed      herewith.                                                                                           |
|--------|---------|----------------------------------------------------------------------------------------------------------------|
|   | (1)     | Incorporated      by reference to Exhibit 3.1 of the registrant’s Form 10-Q/A filed on May      5, 2010. |

|   | (2) | [Intentionally      Omitted] |
|--------|-----|------------------------------|

|   | (3) | Incorporated      by reference to Exhibit 3.2 of the registrant’s Form 10-KSB filed on March      24, 2004. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------|

|   | (4) | Incorporated      by reference to Exhibit 10.1 of the registrant’s Registration Statement on      Form S-1 filed on February 4, 2000, as amended (File No.      333-96185). |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (5) | Incorporated      by reference to Exhibit 99.1 of the registrant’s Registration Statement on      Form S-8 filed March 5, 2004 (File No.  333-113314). |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | (6) | Incorporated      by reference to Exhibit 99.3 of the registrant’s Registration Statement on      Form S-8 filed March 5, 2004 (File No.  333-113314). |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (7) | Incorporated      by reference to Exhibit 10.1 of the registrant’s Form 8-K filed on July      19, 2005. |
|--------|-----|----------------------------------------------------------------------------------------------------------------|

|   | (8) | Incorporated      by reference to Exhibit 10.3 of the registrant’s Registration Statement on      Form S-1 filed on February 4, 2000 (File No.  333-96185). |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (9) | Incorporated      by reference to Exhibit 10.4 of the registrant’s Registration Statement on      Form S-1 filed on February 4, 2000 (File No.  333-96185). |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (10) | Incorporated      by reference to Exhibit 14 of the registrant’s Form 10-KSB filed on March      24, 2004. |
|--------|------|------------------------------------------------------------------------------------------------------------------|

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|                        |   | CORNERSTONE      BANCSHARES, INC.                        |
|-----------------------------|--------|----------------------------------------------------------|
|                        |   |                                                     |
| Date:      May 5,      2010 | By:    | /s/ Nathaniel F. Hughes                                  |   |
|                        |   | Nathaniel      F. Hughes                                 |
|                        |   | President      and Chief Executive Officer               |
|                        |   | (principal      executive officer)                       |
|                        |   |                                                     |
|                        | By:    | /s/ Gary W. Petty, Jr.                                   |   |
|                        |   | Gary      W. Petty, Jr.                                  |
|                        |   | Senior      Vice President and Chief Financial Officer   |
|                        |   | (principal      financial officer and accountingofficer) |

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| Exhibit No.  |   | Description                                                                                                                                         |
|--------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------|
|         |   |                                                                                                                                                |
| 3.1          |   | Amended      and Restated Charter of Cornerstone Bancshares, Inc., as amended      (1)                                                              |
| 3.2          |   | [Intentionally      Omitted]                                                                                                                        |
| 3.3          |   | Amended      and Restated Bylaws of Cornerstone Bancshares, Inc. (3)                                                                                |
| 4            |   | The      right of securities holders are defined in the Charter and Bylaws provided      in exhibits 3.1, 3.2 and 3.3 respectively.                 |
| 10.1*        |   | Cornerstone      Bancshares, Inc. Statutory and Nonstatutory Stock Option Plan.      (4)                                                            |
| 10.2*        |   | Cornerstone      Bancshares, Inc. 2002 Long-Term Incentive Plan. (5)                                                                                |
| 10.3*        |   | Cornerstone      Bancshares, Inc. 2004 Non-Employee Director Plan. (6)                                                                              |
| 10.4*        |   | Cornerstone      Community Bank Employee Stock Ownership Plan. (7)                                                                                  |
| 10.5*        |   | Key      Executive and Employment Agreement with Nathaniel F. Hughes, as amended.      (8)                                                          |
| 10.6*        |   | Key      Executive and Employment Agreement with Jerry D. Lee, as amended.      (9)                                                                 |
| 10.7*‡ |   | Separation      Agreement dated November 12, 2009, by and among Gregory B. Jones,      Cornerstone Community Bank and Cornerstone Bancshares,  Inc. |
| 14           |   | Code      of Ethics. (10)                                                                                                                           |
| 21#          |   | Subsidiaries      of the registrant.                                                                                                                |
| 31.1#        |   | Certification      of principal executive officer.                                                                                                  |
| 31.2#        |   | Certification      of principal financial officer.                                                                                                  |
| 31.3‡  |   | Certification      of principal executive officer.                                                                                                  |
| 31.4‡  |   | Certification      of principal financial officer.                                                                                                  |
| 32#          |   | Section      906 certifications of chief executive officer and chief financial      officer.                                                        |
| 32.1‡  |   | Section      906 certifications of chief executive officer and chief financial      officer.                                                        |

----

| * | Indicates      a management contract or compensatory plan or  arrangement. |
|---|----------------------------------------------------------------------------|

| # | Previously      filed with the registrant’s Form 10-K filed on March 31,    2010. |
|---|-----------------------------------------------------------------------------------------|

| ‡ | Filed      herewith. |
|---------|----------------------|

| (1) | Incorporated      by reference to Exhibit 3.1 of the registrant’s Form 10-Q/A filed on May      5, 2010. |
|-----|----------------------------------------------------------------------------------------------------------------|

| (2) | [Intentionally      Omitted] |
|-----|------------------------------|

| (3) | Incorporated      by reference to Exhibit 3.2 of the registrant’s Form 10-KSB filed on March      24, 2004. |
|-----|-------------------------------------------------------------------------------------------------------------------|

| (4) | Incorporated      by reference to Exhibit 10.1 of the registrant’s Registration Statement on      Form S-1 filed on February 4, 2000, as amended (File No.      333-96185). |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5) | Incorporated      by reference to Exhibit 99.1 of the registrant’s Registration Statement on      Form S-8 filed March 5, 2004 (File No.  333-113314). |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (6) | Incorporated      by reference to Exhibit 99.3 of the registrant’s Registration Statement on      Form S-8 filed March 5, 2004 (File No.  333-113314). |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (7) | Incorporated      by reference to Exhibit 10.1 of the registrant’s Form 8-K filed on July      19, 2005. |
|-----|----------------------------------------------------------------------------------------------------------------|

| (8) | Incorporated      by reference to Exhibit 10.3 of the registrant’s Registration Statement on      Form S-1 filed on February 4, 2000 (File No.  333-96185). |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (9) | Incorporated      by reference to Exhibit 10.4 of the registrant’s Registration Statement on      Form S-1 filed on February 4, 2000 (File No.  333-96185). |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (10) | Incorporated      by reference to Exhibit 14 of the registrant’s Form 10-KSB filed on March      24, 2004. |
|------|------------------------------------------------------------------------------------------------------------------|

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