It was completed in 1925 to connect the Manasquan Inlet and Manasquan River with Bay Head Harbor on the northern end of Barnegat Bay.

The canal is part of the Intracoastal Waterway.

With the completion of the canal, the Barnegat Peninsula effectively became an island.

The island is connected to the mainland by two lift bridges spanning the canal; as well as three bridges to the south which cross the Barnegat Bay.

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