Planned to connect Königsberg (Kaliningrad) and Mauersee (Lake Mamry) in Prussia, construction of the canal was paused for the World Wars and hyperinflation in the Weimar Republic, before being abandoned.

[4] In 1890, hydraulic engineer August Hess—who had previously designed the Aller Canal—revised the plans to replace the inclined planes with locks, publishing The Masurian Shipping Canal in East Prussia (German: Der Masurische Schiffahrtskanal in Ostpreußen) in 1892.

[5] Two years later, engineer Otto Intze published his Expert Opinion on the Utilization of Considerable Water Power for Industrial Purposes Through the Masurian Shipping Canal (German: Gutachten über die Nutzbarmachung erheblicher Wasserkräfte für industrielle Zwecke durch den Masurischen Schiffahrtskanal) which recommended the installation of hydroelectric power stations at the locks.

[11] Construction recommenced in 1934, using local and forced labour,[4] with a proposed completion of May 1941 and a projected total cost of 19,500,000 ℛℳ.

[15] The outbreak of the Second World War again halted construction; the cut was complete but many of the locks along the waterway remained unfinished.

[10] Navvies were subsequently employed to construct Adolf Hitler's nearby Wolf's Lair and the Mauerwald (Mamerki) base of the OKH;[4][16] a legend suggests that the canal's real purpose was to serve a secret U-boat facility at Mauerwald.

[21] North of the Poland–Russia border, the dry canal bed heads north-west and was crossed by the Zheleznodorozhny–Krylovo railway; the bridge is now demolished.

[18] The canal alternated between cuttings and embankments, with some earthworks reaching 15 metres (49 ft) high.

[9] In inhabited areas such as villages and farms, the channel was secured with barbed wire and fencing.

[9] Ten locks were constructed on the canal, with chambers made of reinforced concrete using the Torkret injection method.

[15] These were placed in one of three categories based on the pressure caused by the hydraulic head above the lock:[22] These categories dictated the power systems used to drive the mechanisms of the gates, the need for side pounds (groups 2 and 3 only) to reduce water consumption when lockaging, and the type of lock gate used.

[23] The superstructure of the upper lock at Leśniewo features a recess for the Reichsadler of the coat of arms of the Third Reich.