In preparation for the building of the Bald Eagle & Spring Creek, the Bald Eagle Cross-Cut Canal, a four-mile waterway, was built from the West Branch Canal through Lock Haven to the Bald Eagle Creek and the foot of the new canal. The Lower Division of the Bald Eagle & Spring Creek was opened from Flemington to Howard, site of an iron furnace, in the fall of 1837. However, the Panic of 1837 led to straitened economic conditions throughout the country, and delayed further construction for a decade. The next segment, from Howard to Milesburg, was opened on September 3, 1837. The final segment along Spring Creek into Bellefonte, completing the Upper Division, was opened on September 1, 1848. The first canal boat to arrive from Philadelphia was the Jane Curtin, carrying supplies for the Valentine & Thomas ironworks.
During 1857, the canal was threatened by the prospect of a competitor. The Tyrone and Lock Haven Railroad was chartered to run down the Bald Eagle Valley between Tyrone and Lock Haven, and to build a branch to Bellefonte, paralleling the canal route. However, the Tyrone & Lock Haven was unable to secure sufficient financing for its immediate construction, completing only the branch from Bellefonte to Milesburg and a short section of line from Milesburg to the Bellefonte and Snow Shoe Railroad at Wingate by 1859. It was operated by the latter road for the next several years. Initially, the railroad was something of a boon to the canal: docks were built on the canal at Milesburg so that coal carried down by the railroad from the Snow Shoe area could be loaded into eastbound canal boats. However, this state of affairs was not to last. The Pennsylvania Railroad took up the financing of the Tyrone & Lock Haven, reorganized it as the Bald Eagle Valley Railroad, and pushed it to completion along the length of the Bald Eagle Valley in 1865.
The doom of the Bald Eagle and Spring Creek Navigation was at hand. Major flooding took place in the Susquehanna watershed during March 15–17, 1865, ravaging the canal infrastructure. With little prospect of effective competition with the new railroad line, it was never rebuilt.
Stonework from one of the locks is still visible at the former site of the McCoy and Linn ironworks, in the water gap of Spring Creek between Bellefonte and Milesburg. (The canal lock itself was not impacted by the removal of the 1926 hydroelectric dam at the ironworks site in August and September 2007, but the canal basin between the lock and the dam was filled in with the dam rubble as well as sediments that had built up behind the dam.) It is hoped that future archaeological work may be carried out on the lock itself and the stonework is in places in need of stabilization.