The first sod was turned by the Lord Ward on 31 December 1855 and the canal opened on 20 August 1858, providing a waterway connection between the Black Country towns of Netherton and Tipton.

It was built to relieve the bottleneck of the adjacent Dudley Tunnel which is very narrow, has alternating blocks of one-way working, and had waiting times of eight hours or more, and sometimes several days.

The Netherton tunnel was built with a width of 27 feet (8.2 m) to allow two-way working of narrowboats; and is brick lined throughout.

The air vents that run along the line of the tunnel and provide ventilation, and a shaft of light into the canal, are known by the locals as "pepper pots", because of their shape.

The main reason for the project being overbudget was the extra works necessitated by the condition of the ground through which the tunnel passes.

The southern mouth of the tunnel is in Warrens Hall Park on the border of Dudley and Rowley Regis - the Bumble Hole and Cobb's Engine House are nearby.