The distillery has hired Momentum to create the campaign, which will centre on a Jack Daniel's Saloon and Barbecue Room at the Carling Weekend Leeds and Reading festivals, which take place from 24-26 August.
The 'saloon experience' consists of a seated meeting area where festival-goers can buy Tennessee-style barbecue food and Jack Daniel's drinks.
The brand will be the official spirit of the two festivals, with pouring rights at both. The events are expected to attract about 160,000 people.
Volume sales in the whisky sector as a whole have declined 16% since 2001, falling to a value of £2.65bn in 2006, according to Mintel.
Between 2001 and 2005, sales of blended Scotch, which accounts for the lion's share of the sector, declined by 6%, with the sharpest drop experienced among its core market, the over-55s; one in three members of this group is a whisky drinker.
US imports such as Jack Daniel's are bucking the trend because of their sweeter taste. Volume sales in the category are growing by 7% year on year, having reached almost 10m litres.
Jack Daniel's is the UK's third-biggest whisky, behind The Famous Grouse and Bell's, with a share of 9.9%.