Cave City is a city in Independence and Sharp counties in the U.S. state of Arkansas. The population was 1,946 at the 2000 census. The city was named for a large cave underneath the Crystal River Tourist Camp, which is the oldest motor court in Arkansas. Cave City is known for its award winning "world's sweetest" watermelons and holds an annual watermelon festival in August. Cave City was the home of the controversial newspaper editor Joseph H.