Residents were shocked to see the twisting funnel at 5,150-feet elevation.
"I've never seen a tornado in the mountains before," said a dad who caught the scene on his phone.
Strong winds flatten the family's inflatable Christmas decorations in the front yard.
"Get inside girls," the dad yelled to his screaming girls.
"I was so scared," said another woman. "What is happening?"
The E.F.-1 tornado caught most off-guard largely because of the myth that tornadoes can't form on mountains.
"While conditions would not be optimal for tornado development on top of mountains… tornadoes have been documented to cross the Appalachian Mountains and cross a 10 thousand foot tall mountain in Yellowstone National Park," wrote the NWS Milwaukee office.
The NWS Flagstaff office had a survey team in Star Valley on Sunday and determined damage was consistent with an E.F.-1 tornado with winds between 59-105 mph. The twister cut a path about 100 yards wide for 1.4 miles.
Weather radar indicated that it was a tornado, according to the Storm Prediction Center. The NWS storm reports say 20 structures suffered roof and window damage. When NOAA posted the storm reports, local authorities said there were no injuries, but an official told another local media source that the winds killed a dog.
Residents on the video also report several downed trees.
The storm system that sparked the violent weather in Arizona will strengthen and create some Thanksgiving travel troubles coast to coast this week.