A joint venture of industrialists Alexander Gibson and Jabez B. Snowball, construction started in 1884 and finished in 1887. The opening of the Fredericton Railway Bridge in 1889 gave it a direct connection to the provincial capital.
The line was rerouted between Renous and Nelson to the north bank of the Southwest Miramichi River through to Derby where it joined the Intercolonial Railway mainline at a junction between the bridges over the Southwest and Northwest Miramichi Rivers.
In 1904 the Canada Eastern was purchased by the Intercolonial Railway, a federal Crown corporation. The mainline of the National Transcontinental Railway (NTR), another government concern, was built in 1912, creating a major junction at McGivney. The Intercolonial, NTR, and others were merged into the Canadian Government Railways in 1915 and the Canadian National Railways (CNR) in 1919.
Canada Eastern and later the Intercolonial and CNR passenger trains along the line were given the nickname "Dungarvon Whooper" in reference to a local ghost story.
With declining rail usage through the latter part of the 20th century, the former Canada Eastern line became unprofitable for CNR. It was abandoned between McGivney and Derby in 1985 as well as east of Chatham to Loggieville. The section south of McGivney to Fredericton was officially abandoned in 1995, although the last train over this portion of the line (CN's Nashwaak Subdivision) operated in March 1996 with a coal shipment to a heating plant at CFB Gagetown.
The only original trackage of the Canada Eastern that remains in service is operated by the New Brunswick East Coast Railway between Nelson and Chatham.