Completed in 1790, it connects to the River Thames at Oxford, and links with the Grand Union Canal, which it is combined with for 5 miles (8 km) between to the villages of Braunston and Napton-on-the-Hill.

Since the end of regular commercial goods carriage on the canal in the 1960s, it has gained a new use as a leisure resource, and become used primarily for narrowboat pleasure boating.

Parts of this section were straightened by raising and waterproofing in the 1820s; the remains of a more circuitous route (which kept to the chosen contour) can still be seen in places.

It crosses under the M45 motorway and through broad low fields interspersed by views of wooded knolls and modest hills of Northamptonshire and Warwickshire to reach Braunston.

After passing an old wharf and a pub at Fenny Compton, the canal enters a long cutting which until some time in the 19th century was a tunnel.

The canal then descends the Claydon flight of locks and into the vale of the nascent Cherwell at Cropredy.

Banbury has many visitor moorings alongside the historic and modern shopping areas in the middle of town.

About four miles (6 km) south is a lightly settled locality, Twyford Wharf, where narrowboats up to 60 feet (18 m) can be turned.

Two villages nearby, Kings Sutton and Adderbury (Twyford), are within 30 minutes' walking distance along the road.

Financial problems meant that work on the final stretch from Banbury to Oxford did not begin until 1786, and when it did, James Barnes was appointed as the engineer.

As funds were limited, the Banbury-Oxford stretch was built more cheaply, and to lower standards than the rest of the canal, and many cost saving measures were used whenever possible: Wooden lift or swing bridges were built, instead of more expensive fixed brick bridges.

In 1785 there was a proposal to make the river navigable from the Oxford Canal at Cosford to the town of Lutterworth in Leicestershire.

[5] For the next 15 years the Oxford Canal became one of the most important and profitable transport links in Britain, with most commercial traffic between London and the Midlands using the route.

Much of the London-bound traffic switched to this faster route, as it avoided the passage of the River Thames which still had many flash locks.

Despite these developments, the Oxford Canal remained highly profitable during this period; from 1824 to 1826, the company paid dividends of up to 55% to its shareholders.

When Parliament considered the Act of Parliament for the building of the Grand Junction, the Oxford Canal successfully petitioned to make the Grand Junction pay "bar tolls" to the Oxford Canal to compensate for the loss of traffic south of Napton.

Traffic from Birmingham had to use five miles (8 km) of the Oxford Canal to get from Braunston to join the Grand Junction at Napton.

The Oxford Canal exploited this by charging high tolls for Grand Junction traffic on this short section.

However, despite the railway competition, the total tonnages of cargo carried on the canal did not decline immediately, and in fact continued to rise for some time, however, the company was forced to slash its tolls in order to remain competitive, and this put an end to the large profits which had previously been made, although ironically the railways provided a new source of income to the canal, who paid them to provide water for their locomotives at Rugby.

[5][4] In 1833 a section of the new line of canal in Barby Fields near Dunchurch was used as a test site for a new wrought iron boat, Swallow, built by Graham and Houston.

However, income declined much more sharply due to the company slashing its tolls; takings which had gone from £18,478 in 1791/3, and then risen to a maximum of £90,446 in 1827/29, then fell to £26,312 in 1855.

The staple traffic was coal from the Warwickshire and Leicestershire coalfields to London via the Grand Union Canal.

Coal traffic was relocated to a canal wharf in Juxon Street, in Jericho, Oxford.

[13] The canal was designated as a cruiseway under the Transport Act 1968, which defined at as being a waterway to be maintained for leisure use.

The 10-mile (16 km) stretch from Oxford to Kirtlington, where the Oxfordshire Way meets the canal, is also part of European walking route E2.