Clarkson performed a touching tribute to the country legend, who also served as the host for Monday night's show.
A dressed-in-black Clarkson kicked off the tribute with a rendition of Parton's hit, "I Will Always Love You," made famous in Whitney Houston's The Bodyguard.
The performance brought the crowd to their feet and nearly brought Parton to tears. The "Jolene" singer, who also served as the night's host, came to the stage to say a few words about the tribute, where she was greeted with a big hug from Clarkson.
"I know that Whitney is smiling down on us tonight," Parton said while accepting the honor. "Thank you very much. She'd be proud of that. I was backstage trying not to cry my false eyelashes and slinging snot every direction and tears."
"I have had just a wonderful time being here tonight, I just want you to know that," she continued. "And that just topped it off for me."
The five-time ACM nominee first shared that she'd be paying tribute to the 76-year-old country legend during an episode of The Kelly Clarkson show last month. Clarkson previously performed at the ACMs in 2019, 2018, 2013, and 2007 and her return to the stage was nothing short of amazing.
"It makes me feel great that she is going to be doing it, because Kelly is one of the greatest singers in the world," Parton said. "... With her, you know it’s going to be real good. I do love her to death. I love her personality. I just love the way she is. I have known her for a long time... so that is going to be special to me, of course."
Parton shared her hosting duties with co-hosts Jimmie Allen and Gabby Barrett, who also made history at 22 by being the youngest person to host the show, breaking the record previously held by Wynonna Judd, who was 22 years and 10 months old in April 1987 when she served as co-host.
In addition to hosting and being honored, Parton performed, hitting the stage with Kelsea Ballerini to sing her new song, "Big Dreams and Faded Jeans," which she told ET she was "really looking forward to singing."
"We had a chance to rehearse several days before the show and we will actually be rehearsing the day of. She is so precious, so sweet, and so beautiful," Parton said of the 28-year-old singer. "We just had a fun day of hanging out with the band and rehearsing our song. It was just fun. She is such a great gal."
The 57th Academy of Country Music Awards streams live on Prime Video March 7 at 8:00 p.m. ET.