The Illinois and Michigan Canal runs through the village, intersecting the DuPage at Channahon State Park.

Archaeological evidence suggests that the land on which the village now stands was inhabited as long as three to four thousand years ago by Mound Builders.

"[6] When construction of the Illinois and Michigan Canal began in 1836, Channahon's location was chosen as the site for two of the waterway's locks.

By the 1870s Channahon was home to a growing population and contained a post office, a schoolhouse, a Methodist church, two blacksmithies, and several stores.

The community prospered until the rise of railroad transportation in the late 19th century caused commerce and population in the canal town to diminish.

The Village of Channahon was first incorporated in 1896, but dissolved in 1908 to avoid liability after an automobile fell into the DuPage River due to a bridge failure.

Becoming a mainly agricultural community after the decline of canal commerce, Channahon saw slow growth in the first half of the 20th century.

In the following decades, Channahon's proximity to two major interstates, I-80 and I-55, resulted in the village's rapid industrialization—notably including such facilities as a Mobil oil refinery, two petrochemical plants, a soybean oil production facility, CenterPoint Intermodal Center in neighboring Elwood, and numerous warehouses in both Elwood and Joliet, among which are Amazon and Walmart distribution centers.

Experiencing significant residential and commercial development in response to its industrial economy, Channahon has since grown into an affluent semirural suburb of Chicago.

[17] Grundy County residents are part of Board District 2,[2] and they are represented by Chris Balkema (R), Debra Jo Kinsella (R), Lana Phillips (D), Eric Rasmusson (R), Greg Ridenour (R), and Deb Warning (R).