The initial purpose of the Rideau Canal was military, as it was intended to provide a secure supply and communications route between Montreal and the British naval base in Kingston, Ontario. Westward from Montreal, travel would proceed along the Ottawa River to Bytown (now Ottawa), then southwest via the canal to Kingston and out into Lake Ontario (and vice versa for eastward travel from Kingston to Montreal). The objective was to bypass the stretch of the St. Lawrence River bordering New York State, a route which would have left British supply ships vulnerable to attack or a blockade of the St. Lawrence.
The construction of the canal was supervised by Lieutenant-Colonel John By of the Royal Engineers. Private contractors such as future sugar refining entrepreneur John Redpath, Thomas McKay, Robert Drummond, Thomas Phillips, Andrew White and others were responsible for much of the construction, and the majority of the actual work was done by thousands of Irish and French-Canadian labourers.
The canal was completed in 1832. The final cost of its construction was £822,000. Given the unexpected cost overruns, By was recalled to London and questioned by a parliamentary committee before being cleared of any wrongdoing.
Once the canal was constructed, no further military engagements took place between Canada and the United States. Although the Rideau Canal never had to be used as a military supply route, it played a pivotal role in the early development of Canada. Prior to the locks being completed on the St. Lawrence in the late 1840s, the Rideau served as the main travel route for immigrants heading westward into Upper Canada, and for heavy goods (timber, minerals, grain) from Canada's hinterland heading east to Montreal. Tens of thousands of British immigrants travelled the Rideau in this period. Hundreds of barge loads of goods were shipped each year along the Rideau, allowing Montreal to compete commercially, in the 1830s and 40s, with New York (which had the Erie Canal), as a major North American export port.
As many as a thousand of the workers died from malaria, other diseases and accidents during blasting. Some of the dead remain unidentified as they had no known relatives in Upper Canada. Memorials to the fallen labourers have been erected along the canal route, most recently the Celtic Cross memorial in Ottawa and in Kingston. The first memorial anywhere along the length of the Rideau Canal acknowledging deaths among the labour force was erected in 1993 by the Kingston and District Labour Council and the Ontario Heritage Foundation at Kingston Mills.
Today, only pleasure craft make use of the Rideau Canal. Boat tours of the canal are offered in the city of Ottawa, Merrickville, and at Chaffeys Lock. Recreational boaters can make use of it to travel between Ottawa and Kingston with ease. Most of the locks are still hand-operated. There are a total of 45 locks at 23 stations along the Canal, plus two locks at the entrance to the Tay Canal (leading to Perth).
In normal operations the canal can handle boats up to 27.4m (90ft) in length, 7.9m (26ft) in width, and 6.7m (22ft) in height. In special circumstances a boat up to 33.5m (110ft) in length by 9.1m (30ft) in width can be handled.
In winter, a section of the Rideau Canal passing through central Ottawa becomes officially the world's largest skating rink. The cleared length is 7.8 kilometres (4.8 miles) and has the equivalent surface area of 90 Olympic hockey rinks. It runs from the Hartwell locks at Carleton University to the locks between the Parliament Buildings and the Château Laurier, including Dow's Lake in between. It serves as a popular tourist attraction and recreational area and is also the focus of the Winterlude festival in Ottawa. Beaver Tails, a fried dough pastry, are sold along with other snacks and beverages, in kiosks on the skateway. In January 2008, Winnipeg, Manitoba achieved the record of the world's longest skating rink at a length of 8.54 kilometers, but with a width of only 2 to 3 metres wide, on its Assiniboine River and Red River at The Forks.
Although some residents of Ottawa had been using the canal as an impromptu skating surface for years, the official use of the canal as a skateway and tourist attraction is a more recent innovation. In fact, as recently as the 1970s, the city government of Ottawa considered paving over the canal in order to make an automobile expressway. The federal government's ownership of the canal, however, prevented the city from pursuing this proposal.
When Doug Fullerton was appointed chair of the National Capital Commission, he proposed a recreational corridor around the canal, including the winter skateway between Carleton University and Confederation Park. The plan was implemented despite opposition by city council, and 50,000 people skated on the canal on the first weekend.. City councilor and author Clive Doucet credits this transformation of the canal with reinvigorating the communities of the Glebe, Old Ottawa East and Old Ottawa South.
It has been reported that the National Hockey League's Ottawa Senators are exploring the possibility of playing a regular season game outdoors on the Rideau Canal, using temporary bleachers for the spectators.