[1][2] Construction of the canal had been authorised by an Act of Parliament in 1778, and the engineers John Smeaton, Benjamin Henry Latrobe and William Jessop were appointed in 1787.

After a survey by Jessop the proposed route of the canal was changed to include the tunnel, in order to avoid passing around Tylney Hall whose owner had objected.

[6] The tunnel construction had been initially subcontracted to Charles Jones, even though he had been dismissed by the Thames and Severn Canal company in 1788 after failing to complete the Sapperton Tunnel project; in his defence, he had been asked to build it bigger than originally specified and line it with bricks at no extra cost.

It was first studied for its bat populations in 1975, and was listed as an SSSI in December 1985, after a partial count of the population revealed 541 bats in the first 400 feet (120 m) of the eastern end, from which total numbers were estimated to be around 2,000 animals.

The blockage, combined with several springs in the tunnel, creates an ideal micro-climate for the bats, which is maintained at around 10 °C (50 °F) all year.