It runs 239 kilometres (149 mi), connecting the Qiantang, Cao'e, and Yong watersheds with Hangzhou's terminus for the Grand Canal and Ningbo's ports on the East China Sea.

The terrain of this area of Zhejiang slopes down from mountains to the south to the coastal plain along Hangzhou Bay to the north.

The oldest section of the present waterway was the Shanyin Canal constructed in Shaoxing by the Yue official Fan Li in the 5th century BC during the late Spring and Autumn period.

The canal was an important artery of transport and supply during various periods of disunity in medieval China, notably under the Southern Song whose capital was at Lin'an within present-day Hangzhou.

[3] Despite its lesser importance under the Yuan, Ming, and Qing, the canal was kept navigable through the early modern period before being largely supplanted by railways and roads.

From Dongguo Gate to Liantang in Shangyu District, the Shanyin Canal is 20.7 km (12.9 mi) in length.

[12] During the Northern and Southern dynasties, under governmental and private management, the operation of the Eastern Zhejiang Canal was shaped.

In the early years of the Southern Song dynasty, Emperor Gaozong (Zhao Gou) recruited laborers to reconstruct the Shaoxing and Yuyao sections.

During the Southern Song dynasty, the Eastern Zhejiang Canal was restored several times, and its navigability was improved.

With the construction of seawalls and the formation of tidal flats in Zhejiang, a water system with lakes densely covering the regions along the canal was developed.

Particularly in the late Qing dynasty, with the emergence of steamships and the Xiaoshan-Ningbo Railway, the Eastern Zhejiang Canal was gradually replaced.

[15] At the end of the 20th century, due to the development of Ningbo port, the transportation cost increased, prompting the reconstruction of the Eastern Zhejiang Canal to be included on the political agenda.

[citation needed] The Eastern Zhejiang Canal mainly functioned in four ways throughout its history: shipping, irrigation, the Caoyun system and water stations.

Exported products like porcelain were transported to Ningbo first via the canal then would be shipped to foreign countries by the Silk Road.

Meanwhile, products from Japan, Vietnam, Goryeo and other countries were also transported to the capital city Lin’an from the canal.

In the Ming dynasty (1368–1644), Ningbo was the only port receiving Japanese tributary ships, the tribute then transported to the capital city by the canal.

During the Southern dynasties (420–589), four yandai structures (a kind of earth dam used for raising upstream water level to benefit shipping or irrigation in ancient China) were constructed.

In the tenth year of Yuanhe of the Tang dynasty (815), canals in Jiangnan (Chinese: 江南) area were repaired.

Eastern Zhejiang was important in collecting and transporting tribute grain, and the canal had a significant role in this process.

During the Southern Song dynasty (1127–1279), substantial goods and materials from the eastern Zhejiang area like salt and rice together with the tribute grain from Fujian Province (which arrived by sea transport) were shipped to Lin’an via the canal.

Later, during the Yuan dynasty (1271–1368), tribute grain started to be shipped in a co-operative sea-river joint transportation method.

During the reign of Xianfeng emperor in the Qing dynasty, once again, it was decreed that tribute grain was to be transported by sea and the canal started to lose its function in the Caoyun system.

In the thirty-second year of the reign of the Guangxu emperor, modern Chinese post was established and delivery stores abolished.

In the Chinese legend the Butterfly Lovers, the protagonist Liang Shanbo looked for Zhu Yingtai along the Eastern Zhejiang Canal.

In 2007, the Ministry of Transport of the People's Republic of China enacted a document named "The National Inland Waterway and Port Layout Plan."

Some reconstructions were also completed along the canal, including railways, roads, constructions which would be affected by this project and aids for navigation.

It turned out to be the single inland waterway reconstruction project with the biggest investment scale in the history of mainland China.

However, in Ningbo, due to bridges across the Yao River not satisfying the demand of navigation, large investments needed to be put into reconstruction.

With the appeal of relevant experts and media, in November 2008, the Eastern Zhejiang Canal was brought into this application.