North along SH 394 as it enters Craig, April 2014Looking east near where SH 394 turns east south of Craig, April 2014
SH 394 begins in Craig at the intersection of Ranney Street and West Victory Way (carrying westbound US 40/SH 13). From its western terminus SH 394 proceeds south on Ranney Street for one block before crossing the eastbound direction of the US 40/SH 13 one-way pair that runs along West 4th Street. About another block south, the highway crosses a set of railroad tracks and leaves the city limits of Craig.
About 0.7 miles (1.1 km) south of Craig, after another railroad crossing, SH 394 crosses over the Yampa River. Roughly 0.3 miles (0.48 km) farther south the highway turns east at an intersection with County Road 107 (CR 107), which continues south, on the southern edge of a small oxbow lake of the Yampa River. East of CR 107, SH heads easterly, roughly parallel US 40.[2]
After heading easterly for about 5.5 miles (8.9 km) and immediately after a junction with County Road 100, SH 394 turns south and (as of September 2008[update]) the pavement ends shortly thereafter. After heading southerly for roughly 1.4 miles (2.3 km), at a T intersection with County Road 113 (which continues south), the highway turns to head easterly for about another 1.1 miles (1.8 km). The highway ends at the county line between Moffat County and Routt County, southeast of Dresher Reservoir. The road continues easterly from SH 294's western terminus as County Road 65 in Routt County to rejoin US 40 in Hayden.[2]