<PAGE>

                           SCHEDULE 14A INFORMATION

               Proxy Statement Pursuant to Section 14(a) of the
                        Securities Exchange Act of 1934

Filed by the Registrant  [X]

Filed by a Party other than the Registrant [_]

Check the appropriate box:

[_]       Preliminary Proxy Statement

[_]       Confidential, for Use of the Commission Only (as permitted by Rule
          14a-6(e)(2))

[X]       Definitive Proxy Statement

[_]       Definitive Additional Materials

[_]       Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12

                               CNB HOLDINGS, INC.
                               ------------------
                (Name of Registrant as Specified In Its Charter)

                                      N.A.
                                      ----
                    (Name of Person(s) Filing Proxy Statement
                          if other than the Registrant)


Payment of Filing Fee (Check the appropriate box):

[X]       No fee required.

[_]       Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
          0-11.

                                 Not Applicable.

[_]       Fee paid previously with preliminary materials.

[_]       Check box if any part of the fee is offset as provided by Exchange Act
          Rule 0-11(a)(2) and identify the filing for which the offsetting fee
          was paid previously. Identify the previous filing by registration
          statement number, or the Form or Schedule and the date of its filing.

                                 Not Applicable.
<PAGE>

                              CNB HOLDINGS, INC.
                                 P.O. Box 1060
                              900 Memorial Drive
                            Pulaski, Virginia 24301

                   NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

     NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the "Annual
Meeting") of CNB Holdings, Inc., (the "Company") will be held on Thursday, April
12, 2001, at 10:00 a.m., local time in the Training Room at Community National
Bank, 900 Memorial Drive, Pulaski, Virginia, for the purpose of considering and
voting upon:

     1.   The election of three directors of the Company to serve until the 2004
          Annual Meeting of Shareholders.

     2.   Such other matters as may properly come before the Annual Meeting or
          any adjournment thereof.

     Only shareholders of record at the close of business on Monday, February
28, 2001, are entitled to notice of and to vote at the meeting or any
adjournment thereof.

     A Proxy Statement and a proxy solicited by the Board of Directors are
enclosed herewith.  To ensure a quorum for the meeting, please sign, date and
return the proxy promptly in the enclosed envelope.  If you attend the meeting,
you may revoke your proxy and vote in person.  The Company's 2000 Annual Report
to Shareholders is enclosed for your information.


                                              By Order of the Board of Directors


                                              /s/ A. Carole Pratt

                                              A. Carole Pratt
                                              Secretary

March 9, 2001

     Please complete and return the enclosed proxy promptly.  If you attend the
meeting in person, you may withdraw your proxy and vote your own shares.

<PAGE>

                               CNB HOLDINGS, INC.
                                  P.O. Box 1060
                               900 Memorial Drive
                             Pulaski, Virginia 24301
                           ___________________________

                                 PROXY STATEMENT
                           ___________________________

                       2001 ANNUAL MEETING OF SHAREHOLDERS
                            To Be Held April 12, 2001

     This Proxy Statement is furnished to the shareholders of CNB Holdings, Inc.
(the "Company") in connection with the solicitation of proxies by the Board of
Directors of the Company to be voted at the 2001 Annual Meeting of Shareholders
of the Company (the "Annual Meeting") and any adjournment thereof. The Annual
Meeting will be held on Thursday, April 12, 2001 at 10:00 a.m., local time at
Community National Bank, 900 Memorial Drive, Pulaski, Virginia. This Proxy
Statement and the accompanying proxy are being mailed to shareholders on or
about March 9, 2001.

                                    VOTING

General

     The securities that can be voted at the Annual Meeting consist of the
common stock of the Company (the "Common Stock"), with each share entitling its
owner to one vote on each matter submitted to the shareholders. The record of
shareholders entitled to vote at the Annual Meeting was taken as of the close of
business on Wednesday February 28, 2001. On that date the company had
outstanding and entitled to vote 926,399 shares of Common Stock, with each share
entitled to one vote.

Proxies

     All properly executed proxy cards delivered pursuant to this solicitation
and not revoked will be voted at the Annual Meeting in accordance with the
directions given. Shareholders should specify their choices with regard to the
election of directors on the accompanying proxy card. If no specific
instructions are given with regard to the matters to be voted upon, the shares
represented by a signed proxy card will be voted "FOR" the election of all
director nominees. If any other matters properly come before the Annual Meeting,
the persons named as proxies will vote upon such matters according to their
judgment.

     All proxy cards delivered pursuant to this solicitation are revocable at
any time at the option of the persons executing them by giving written notice to
the Secretary of the Company at P.O. Box 1060, 900 Memorial Drive, Pulaski,
Virginia 24301, or by executing and delivering to the Secretary a later dated
proxy, or by voting in person at the Annual Meeting.

     All expenses incurred in connection with the solicitation of proxies will
be borne by the Company. Such costs include charges by brokers, fiduciaries and
custodians for forwarding proxy materials to beneficial owners of stock held in
their names. Solicitation may be undertaken by mail, telephone and personal
contact by directors, officers and employees of the Company without additional
compensation.

                                      -1-
<PAGE>

Security Ownership of Certain Beneficial Owners and Management

     The following table sets forth the beneficial ownership of the Common Stock
by the directors, executive officers and holders of 5 percent or more of the
outstanding shares of the Common Stock and all directors and executive officers
of the Company as a group as of February 28, 2001.

<TABLE>
<CAPTION>
                                                       Principal Occupation             Shares            Percentage of
Name, Age & Address                   Director              During the               Beneficially            Shares
of Beneficial Owner                     Since             Past Five Years                Owned           Outstanding(1)
-------------------                     -----             ---------------                -----           --------------

                                        DIRECTORS TO SERVE UNTIL 2002

<S>                                   <C>              <C>                           <C>                 <C>
Hiawatha Nicely, Jr., 51              1993        Chairman, President and CEO of          57,595               5.0%
Dublin, Virginia                                  the Company, COO of the Bank
                                                  1997-1999, Chairman of the
                                                  Bank 1993-1997

A. Carole Pratt, D.D.S., 49           1993        Secretary of the Company;               30,945(2)            2.6%
Pulaski, Virginia                                 General Dentistry

David W. Ratcliff, Jr., 56            1993        Business Manager, Defense               28,300(3)            2.4%
Pulaski, Virginia                                 Reconversion and Development -
                                                  Alliant Techsystems, Inc.


                                        DIRECTORS TO SERVE UNTIL 2003

Jack W. Bowling, 54                  1993         President, H. T. Bowling, Inc.          61,315(6)            5.3%
Dublin, Virginia

Jackson M. Bruce, 58                 1993         Partner, law firm of Gilmer,            55,470               4.8%
Dublin, Virginia                                  Sadler, Ingram,
                                                  Sutherland & Hutton
                                                  Chairman of the Bank 1999 -
                                                  present

Nathaniel R. Tuck, D.C., 48          1993         President and Owner,                    34,232               2.9%
Pulaski, Virginia                                 Tuck Clinic of
                                                  Chiropractic, P.C.
</TABLE>

                                      -2-
<PAGE>

<TABLE>
<CAPTION>
                                                       Principal Occupation             Shares            Percentage of
Name, Age & Address                   Director              During the               Beneficially            Shares
of Beneficial Owner                     Since             Past Five Years                Owned           Outstanding(1)
-------------------                     -----             ---------------                -----           --------------

                                            NOMINEES FOR ELECTION AS
                                         DIRECTORS TO SERVE UNTIL 2004

<S>                                   <C>              <C>                           <C>                 <C>
Sybil S. Atkinson, 54                  1993       Mediaid of America, Inc.;               30,798(4)            2.7%
Pulaski, Virginia                                 Parish Administrator of Christ
                                                  Episcopal Church

Randolph V. Chrisley, 53               1993       Vice President of Sales,                55,066               4.7%
Draper, Virginia                                  Pulaski Furniture Corporation

J. David Wine, 52                      1993       Founder of Advance Health-Care          56,440(5)            4.9%
Pulaski, Virginia                                 Services, Inc.; and Advanced
                                                  Health Services, Inc.;
                                                  cofounder of Bay State
                                                  Medical, Inc., and Home Care
                                                  Solutions, Inc.

All Directors and
Executive Officers
As a Group (9 Persons)                                                                   409,711              35.2%
</TABLE>


__________________
(1)  For purposed of this table, beneficial ownership has been determined in
     accordance with the provision of Rule 13d-3 of the Securities Exchange Act
     of 1934 under which, in general, a person is deemed to be the beneficial
     owner of a security if he has or shares the power to vote or direct the
     voting of the security or the power to dispose of or direct the disposition
     of the security, or if he has the right to acquire beneficial ownership of
     the security within sixty days. Percentage is determined on the basis of
     926,399 shares of Common Stock issued and outstanding, plus in each case
     shares subject to currently exercisable options. The option ownership of
     the directors reflected in this column is as follows: Mr. Nicely - 27,970;
     Dr. Pratt - 15,470; Mr. Ratcliff - 15,470; Ms. Atkinson - 15,470; Mr.
     Chrisley - 27,566; Mr. Wine - 27,690; Mr. Bowling - 27,938; Mr. Bruce -
     27,970; and Dr. Tuck - 15,470.
(2)  Includes 380 shares held by Ms. Pratt's minor children.
(3)  Includes 374 shares held jointly with Mr. Ratcliff's children.
(4)  Includes 1,263 shares owned by Ms. Atkinson's minor children.
(5)  Includes 3,143 shares owned by an individual retirement account for the
     benefit of Mr. Wine's wife.
(6)  Includes 32,625 shares held by an investment company affiliate of Mr.
     Bowling.


                              ELECTION OF DIRECTORS

Nominees

     By resolution of the Board of Directors, the Board consists of nine
directors. The terms of the directors are staggered so that each year one-third
of the Board of Directors is elected; and each director serves until the third
Annual Meeting following his or her election and thereafter until a

                                      -3-
<PAGE>

successor has been elected and has qualified. This year, the terms of three
directors are expiring and thus three directors will be elected.

     Certain information concerning the nominees for election of directors at
this Annual Meeting who will serve until the 2004 Annual Meeting of Shareholders
is set forth above, as is certain information about the other classes of
directors whose terms will expire at the 2002 and 2003 Annual Meetings of
Shareholders. All of the nominees are currently directors of the Company and
Community National Bank, the Company's subsidiary bank (the "Bank").

     In the event that any nominee withdraws or for any reason is not able to
serve as a director, the proxy will be voted for such other person as may be
designated by the Board of Directors as substitute nominee, but in no event will
the proxy be voted for more than three nominees. The Board of Directors has no
reason to believe that any nominee will not serve if elected.


Director Compensation

     The Company did not pay director's fees during the last fiscal year.
However, Community National Bank paid a total of $9,700 in directors' fees. Each
director of the Bank received $100 per Board meeting attended. Directors of the
Company participate in the Company's stock option plan. See "Stock Option Plan."

Company Board and Committee Meetings and Attendance

     The Board of Directors of the Company held five meetings during the fiscal
year. All directors attended at least 75 percent of all meetings of the Board.
The Company does not have audit or nominating committees at the holding company
level. Its only standing committee is the Stock Option Committee. See "Stock
Option Plan".

Certain Relationships and Related Transactions

     The Company and the Bank have had and expect to have banking and other
transactions in the ordinary course of business with directors and officers of
the Company and the Bank and their affiliates, including members of their
families or corporations, partnerships or other organizations in which such
directors or officers have a controlling interest. Such transactions are on
substantially the same terms (including price, interest rates and collateral) as
those prevailing at the time for comparable transactions with unrelated parties,
and are not expected to involve more than the normal risk of collectibility nor
present other unfavorable features to the Company and the Bank. The Bank is
subject to a limit on the aggregate amount it may lend to its and the Company's
directors and officers as a group equal to its unimpaired capital and surplus
(or, under a regulatory exemption available to banks with less than $100 million
in deposits, twice that amount). Loans to individual directors and officers must
also comply with the Bank's lending policies and statutory lending limits, and
directors with a personal interest in any loan application are excluded from the
consideration of such loan application.

     The executive officers of the Company are elected by the Board of Directors
and serve at the pleasure of the Board. There are no family relationships among
any of the directors or executive officers.

THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE PROPOSAL TO
ELECT THE THREE NOMINEES LISTED AS DIRECTORS OF THE COMPANY.

                                      -4-
<PAGE>

Executive Compensation

     The following table sets forth the compensation of the Corporation's Chief
Executive Officer for the fiscal years ended December 31, 2000, 1999 and 1998.
No officer received in excess of $100,000 for the current year.

                           Summary Compensation Table

                                                           Other Annual
      Chief Executive Officers        Year     Salary      Compensation
      ------------------------        ----     ------      ------------

      Hiawatha Nicely, Jr.            2000     $     --       $ 1,200
                                      1999     $ 12,187       $    --
                                      1998     $ 53,950       $    62

     The following table lists the stock options granted during fiscal year 2000
to Hiawatha Nicely, Jr., elected President and Chief Executive Officer of the
Company in August 1997. The options listed below were granted under the CNB
Holdings, Inc. 1995 Stock Option Plan, pursuant to which directors, executive
officers and certain other key employees of the Company and the Bank can receive
options to purchase shares of the Company's Common Stock. See "Stock Option
Plan."

                        Option Grants in Fiscal Year 2000

<TABLE>
<CAPTION>
                                          Percent of Total
                                               Options
                                             Granted to
                            Options           Employees         Exercise or     Expiration
Name                        Granted       in Fiscal Year(1)     Base Price        Date
----                        -------       -----------------     ----------        -----
<S>                         <C>           <C>                   <C>            <C>
Hiawatha Nicely, Jr.          594               10.4%             $ 8.00       April 2010
</TABLE>
_____________________
(1)  Options for a total of 5,692 shares of Company Common Stock were granted
     under the Stock Option Plan. Each director of the Company received shares
     under the plan.

Stock Option Plan

     The Company's Stock Option Plan (the "Plan") was approved by shareholders
at the 1995 Annual Meeting. The provides for the issuance of stock options and
restricted stock covering an aggregate of 344,375 shares (adjusted for the May
30, 1997 five-for four stock split) to directors, officers and certain key
employees of the Company and the Bank and other participants designated under
the Plan (collectively, the "Participants"). The Plan provides for the issuance
of incentive stock options to officers and key employees of the Company and the
Bank and nonqualified stock options and restricted stock to all Plan
Participants. The Plan is administered by the Stock Option Committee of the
Board of Directors, which consists of Messrs. Bruce, Chrisley, Nicely and Wine
and Dr. Pratt.

     Incentive Stock Options. The Plan provides for the issuance of incentive
stock options covering a maximum of 62,500 shares of the Common Stock (as
adjusted for the May 30, 1997 five-for four stock split), subject to future
adjustment for any stock splits, stock dividends, combinations or exchanges, or
other changes which affect the Common Stock. As discussed below, incentive stock
options afford certain tax benefits to the recipients. In general, to qualify as
an incentive stock option, the option must

                                      -5-
<PAGE>

be granted only to employees of the Company, be granted within ten years of the
earlier of the date the Plan is adopted by the Board or the date of approval of
the Plan by the Company's shareholders, not be exercisable more than ten years
after the date of grant, have an exercise price of not less than the fair market
value of the Common Stock at the time of grant, not be transferable other than
by will or the laws of descent and distribution, and be granted to a person who
does not own more than 10% of the total combined voting power of all classes of
stock of the Company or its subsidiaries at the time of grant. In addition, the
Internal Revenue Code limits the value of shares that can be exercised for the
first time by an employee in any one year under an incentive stock option plan
to $100,000.

     Nonqualified Stock Options. The Plan provides for automatic annual grants
of nonqualified stock options beginning in 1996 to the directors of the Company
on the day following the annual meeting of shareholders based on a formula that
reflects his or her performance during the year as judged by certain objective
criteria (the "Annual Director Grants"). The formula provides that the number of
shares of Common Stock covered by each Annual Director Grant is 625 shares,
subject to adjustment (i) downward by 31 shares if the director has missed more
than one meeting of the Board of Directors since the last annual meeting, (ii)
downward by 31 shares if the director has failed to complete a director
education seminar since the last annual meeting, and (iii) upward or downward by
not more than 31 shares based on the percentage by which the Bank exceeds or
fails to exceed its performance goals. The exercise price is the estimated
market price on the grant date.

     In 1995, the Company provided a one-time grant of options to the directors
based on performance criteria relating to their participation as directors in
the success of the Company and the Bank, including the number of shares
purchased in the initial offering, service in leadership positions on committees
of the Bank's Board of Directors, and other contributions. The aggregate amount
of shares covered by such options was 206,250, as adjusted for the May 30, 1997
five-for-four stock split, exercisable until 2005. The exercise price of those
options, as adjusted for the May 30, 1997 stock split, is $8.00 per share.

     All of the nonqualified options issuable to directors described above
provide that the options are forfeited should the Company or the Bank be
required to increase its equity capital pursuant to a capital directive issued
by the Office of Comptroller of the Currency and the holder does not exercise
the options with certain time frames.

     Restricted Stock. The Plan permits the issuance of shares of Common Stock
to Participants subject to vesting requirements based on continued service to
the Company or the Bank, the Company's or the Bank's performance, the individual
performance of the grantee, and other conditions deemed appropriate by the Stock
Option Committee. Shares of restricted stock are not transferable until vested.
Assuming the maximum option grants described above are made based on the
Company's current management structure, there will be no shares of restricted
stock available for issuance under the Plan. There are no present plans to issue
any shares of restricted stock.

Compliance with Section 16 of the Securities Exchange Act of 1934

     Based on a review of the reports of changes in beneficial ownership of
Company Common Stock furnished to the Company, the Company believes that its
officers and directors filed on a timely basis the reports required to be filed
under Section 16 of the Securities Exchange Act of 1934 during the fiscal year
ended December 31, 2000.

                                      -6-
<PAGE>

                OTHER MATTERS WHICH MAY COME BEFORE THE MEETING

     The Board of Directors knows of no matters other than those stated above
which are to be brought before the meeting. However, if any other matter should
be presented for consideration and voting, it is the intention of the persons
named in the enclosed form of Proxy to vote the Proxy in accordance with their
judgment of what is in the best interest of the Company.

                  Information Relating to Shareholder Proposals

     Proposals of shareholders intended to be presented at the 2002 Annual
Meeting of Shareholders of the Company must be received by the Company no later
than October 31, 2001 in order for such proposals to be included in the
Company's proxy statement and form of proxy relating to such meeting.

                    INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

     Larrowe & Company, PLC, Galax, Virginia, acted as the Company's principal
independent certified public accountants for the fiscal years ended December 31,
1993 through 2000 and has been selected by the Board of Directors to act as the
Company's independent certified public accountants for the current fiscal year.
Representatives of Larrowe & Company, PLC are expected to be present at the
shareholders' meeting and will have the opportunity to make a statement if they
desire to do so and to respond to appropriate questions.

Services and Fees During 2000

     As the Company's independent accountants for 2000, Larrowe & Company, PLC
provided various audit and non-audit services for which the Company was billed
for fees as further described below. None of the hours expended on Larrowe &
Company, PLC's audit of the Company's financial statements were attributed to
work performed by persons other than the principal accountant's full-time,
permanent employees. The Company's Audit Committee has considered whether
Larrowe & Company, PLC's provision of non-audit services is compatible with
maintaining its independence.

     Audit Fees   Larrowe & Company, PLC audited the Company's annual financial
     ----------
statements included in its 2000 Annual Report on Form 10-KSB and, during 2000,
it reviewed the financial statements included in the Company's Quarterly Reports
on Form 10-QSB. The aggregate amount of fees billed to the Company for those
services was $32,728.

     Financial Information Systems Design and Implementation Fees   During
     ------------------------------------------------------------
2000, Larrowe & Company, PLC provided no services related to financial
information systems design and implementation.

     All Other Fees   In addition to the services listed above, during 2000,
     --------------
Larrowe & Company, PLC provided a number of other services to the Company for
which the aggregate amount of fees billed to the Company was $41,638.

                                      -7-
<PAGE>

                           AVAILABILITY OF FORM 10-KSB

     On or about March 31, 2001, the Company will file with the Securities and
Exchange Commission an annual report (Form 10-KSB) for the year ended December
31, 2000. A copy of the Company's Form 10-KSB can be obtained without charge by
writing to the Corporate Secretary at P.O. Box 1060, 900 Memorial Drive,
Pulaski, Virginia 24301.

                                             By order of the Board of Directors


                                             /s/ A. Carole Pratt

                                             A. CAROLE PRATT
                                             Secretary

Pulaski, Virginia
March 9, 2001

                                      -8-
<PAGE>

                              CNB HOLDINGS, INC.
                                P. O. Box 1060
                              900 Memorial Drive
                            Pulaski, Virginia 24301

     This proxy is solicited by the Board of Directors of CNB Holdings, Inc.
(the "Company") for the 2000 Annual Meeting of Shareholders to be held on April
12, 2001 (the "Annual Meeting").

     The undersigned hereby appoints David W. Ratcliff, Jr. And A. Carole Pratt
and each of them, with full power of substitution, as proxies to vote all of the
shares of Common Stock of the Company which the undersigned may be entitled to
vote at the Annual Meeting, and at any adjournments thereof, on the following
matters in the following manner:

1.   Election of three directors of the Company to serve until the 2004 Annual
     Meeting of Shareholders.

     [_]    FOR all nominees listed below    [_]    WITHHOLD AUTHORITY to vote
            (except as marked to the                for all nominees listed
            contrary below)                         below

            Sybil S. Atkinson, Randolph V. Chrisley, J. David Wine

(Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name below.)
<PAGE>

2.   In accordance with their judgment, upon such other matters as may properly
     come before the Annual Meeting or any adjournment thereof.

     When this Proxy is properly executed and returned, and not revoked, the
shares it represents will be voted at the meeting in accordance with the choices
specified above. If no choice is specified, it will be voted for the election of
the nominees listed above.

      PLEASE DATE AND SIGN THIS PROXY EXACTLY AS YOUR NAME APPEARS BELOW.


                                                   _____________________________
                                                      (Signature of Shareholder)


                                                   _____________________________
                                                      (Signature of Shareholder)


                                                   Date:__________________, 2001


NOTE: When signing as attorney, trustee, administrator, executor or guardian,
please give your full title as such. If a corporation, please sign in full
corporate name by President or other authorized officer. In the case of joint
tenants, each joint owner must sign.