In the early part of the 20th century, Canada was the home of the second and third largest astronomical telescopes in the world: the 1.88 m (74 inch) reflector at the David Dunlap Observatory in Richmond Hill, Ontario and the 1.82 m (72 inch) Plaskett telescope at the Dominion Astrophysical Observatory in Saanich, British Columbia.

In order to regain prominence in the field of astronomy, in 1963 the Director of the DAO Dr. R. M. Petrie proposed the construction of a national observatory, with a 3.81 m (150 inch) telescope as the primary instrument.

The site had to have an elevation of at least 4,000 feet (1,200 m) (in order to keep atmospheric turbulence to a minimum), not be subject to rapid changes in weather or extreme temperature, and be distant from industrial and population centres.

The observatory was originally named in honour of Queen Elizabeth II to commemorate her visit to Canada in the fall of 1964.

As work progressed, opposition within the Canadian astronomical community grew, as it was felt by some that a site of much higher quality could be obtained outside of Canada.