Carter was appointed a brigadier general of volunteers without resigning from the Navy. He led an infantry brigade at the Battle of Mill Springs on January 19, 1862, and participated in operations under Brigadier General George W. Morgan that resulted in the occupation of Cumberland Gap on June 17, 1862. Carter's hope that Morgan would then invade and occupy East Tennessee was dashed when Morgan was forced to retreat in the face of a Confederate move into Kentucky—Braxton Bragg's Perryville Campaign.