It was funded by the Mammoth Internal Improvement Act, Indiana's attempt to take part in the canal-building craze started by the Erie Canal.

The eight fully completed miles (13 km) were entirely within the Indianapolis section, starting in Broad Ripple in 1836 and continuing roughly parallel the White River to downtown.

In 1904, the Indianapolis Water Company (IWC) finally took advantage of the partially built canal as a source for a purification plant.

[3] In the late 1960s, construction of Interstate 65 forced a section of the canal underground and, by 1969, the IWC had ceased using it as a source of power for its West Washington Street pumping station.

The city later undertook a project, beginning in 1985, to drain, rebuild, lower, and then restore water to the remaining downtown section of the canal.

[5] Paved with compacted stone it runs from Broad Ripple to Burdsal Parkway near Riverside Park and passes by Butler University and the Indianapolis Museum of Art.