The Shropshire Union Canal at Little Stanney Wirral

The first British canals were built in Roman times as irrigation or land drainage canals or short connecting spurs between navigable rivers, such as the Foss Dyke, Car Dyke or Bourne-Morton Canal; all in Lincolnshire

A spate of building projects, such as castles, monasteries and churches, led to the improvement of rivers for the transportation of building materials. Various Acts of Parliament were passed regulating transportation of goods, tolls and horse towpaths for various rivers. These included the rivers Severn, Witham, Trent and Yorkshire Ouse. The first Act for navigational improvement in England was in 1425, for improvement of the river Lea, a major tributary of the River Thames

In the post-medieval period some natural waterways were 'canalised' or improved for boat traffic, in the 16th century. The first Act of Parliament was obtained by the City of Canterbury, in 1515, to extend navigation on the River Stour in Kent, followed by the River Exe in 1539, which led to the construction in 1566 of a new channel, the Exeter Canal. Simple flash locks were provided to regulate the flow of water and allow loaded boats to pass through shallow waters by admitting a rush of water, but these were not purpose-built canals as we understand them today.

The transport system that existed before the canals were built consisted of either coastal shipping or horses and carts struggling along mostly un-surfaced mud roads (although there were some surfaced Turnpike roads). There was also a small amount of traffic carried along navigable rivers. In the 17th century, as early industry started to expand, this transport situation was highly unsatisfactory. The restrictions of coastal shipping and river transport were obvious and horses and carts could only carry one or two tons of cargo at a time. The poor state of most of the roads meant that they could often become unusable after heavy rain. Because of the small loads that could be carried, supply of essential commodities such as coal, and iron ore were limited, and this kept prices high and restricted economic growth. One horse-drawn canal barge could carry about thirty tonnes at a time, faster than road transport and at half the cost.

Some 29 river navigation improvements took place in the 16th and 17th centuries. The government of King James established the Oxford-Burcot Commission in 1605 which began to improve the system of locks and weirs on the River Thames, which were opened between Oxford and Abingdon by 1635. In 1635 Sir Richard Weston was appointed to develop the River Wey Navigation, making Guildford accessible by 1653. In 1670 the Stamford Canal opened, indistinguishable from 18th century examples with a dedicated cut and double-door locks. In 1699 legislation was passed to permit the Aire & Calder Navigation which was opened 1703, and the Trent Navigation which was built by George Hayne and opened in 1712. Subsequently, the Kennet built by John Hore opened in 1723, the Mersey and Irwell opened in 1725, and the Bristol Avon in 1727. John Smeaton was the engineer of the Calder & Hebble which opened in 1758, and a series of eight pound locks was built to replace flash locks on the River Thames between Maidenhead and Reading, beginning in 1772. The net effect of these was to bring most of England, with the notable exceptions of Birmingham and Staffordshire, within 15 miles (24 km) of a waterway The British canal system of water transport played a vital role in the United Kingdom's Industrial Revolution at a time when roads were only just emerging from the medieval mud and long trains of pack horses were the only means of "mass" transit by road of raw materials and finished products (it was no accident that amongst the first canal promoters were the pottery manufacturers of Staffordshire). The UK was the first country to acquire a nationwide canal network.

Canals came into being because the Industrial Revolution (which began in Britain during the mid-18th century) demanded an economic and reliable way to transport goods and commodities in large quantities. Some 29 river navigation improvements took place in the 16th and 17th centuries starting with the Thames locks and the River Wey Navigation. The biggest growth was in the so-called "narrow" canals which extended water transport to the emerging industrial areas of the Staffordshire potteries and Birmingham as well as a network of canals joining Yorkshire and Lancashire and extending to London.

The 19th century saw some major new canals such as the Caledonian Canal and the Manchester Ship Canal. By the second half of the 19th century, many canals were increasingly becoming owned by railway companies or competing with them, and many were in decline, with decreases in mile-ton charges to try to remain competitive. After this the less successful canals (particularly narrow-locked canals, whose boats could only carry about thirty tons) failed quickly.

The 20th century brought competition from road-haulage, and only the strongest canals survived until the Second World War. After the war, decline of trade on all remaining canals was rapid, and by the mid 1960s only a token traffic was left, even on the widest and most industrial waterways. In the 1960s the infant canal leisure industry was only just sufficient to prevent the closure of the still-open canals, but then the pressure to maintain canals for leisure purposes increased. From the 1970s onwards, increasing numbers of closed canals were restored by enthusiast volunteers. The success of these projects has led to the funding and use of contractors to complete large restoration projects and complex civil engineering projects such as the restoration of the Victorian Anderton Boat Lift and the new Falkirk Wheel rotating lift.

Restoration projects by volunteer-led groups continue. There is now a substantial network of interconnecting, fully navigable canals across the country. In places, serious plans are in progress by the Environment Agency and British Waterways Board for building new canals to expand the network, link isolated sections, and create new leisure opportunities for navigating 'canal rings', for example: the Fens Waterways Link and the Bedford and Milton Keynes Waterway.