Henagar is a city in DeKalb County, Alabama, United States. At the 2000 census the population was 2,400.Henagar is located on top of Sand Mountain. The South Sauty Creek flows nearby.The Sand Mountain Potato Festival is celebrated each July in Henagar, with potatoes, live music, entertainment, arts and crafts, games, and fireworks.One of the few drive-in theaters in the United States is located in Henagar.