The highway serves as an access route to logging and industrial roads which travel deeper into the forest.

[4][5] The highway began in Windermere and travelled east along the southern shore of Three Mile Lake, passing through the village of Ufford along the way.

The route briefly turned north concurrent with Highway 532 near Raymond before resuming eastward.

[6] The highway was extended east to Port Sydney in 1960, bringing it to its peak length of 26.5 km (16.5 mi).

[10][11] During the mid-1970s, a new road was constructed between Sioux Lookout and Highway 599 north of Savant Lake to provide access to the pulpwood and iron ore resources in the area.

Highway 516 first appeared in 1982–83 official Ontario road map as an unpaved route.

[2] The following table lists the major junctions along Highway 516, as noted by the Ministry of Transportation of Ontario.