A canal survey was authorized by the state in 1828, and the order to commence construction was issued in 1829. From 1830 to 1833, the canal and its locks were built along the Keuka Outlet, a natural stream connecting the two lakes.
The canal opened in 1833 and was officially abandoned in 1877, its holdings taken over by railroads. In 1972, the rail line was demolished in Hurricane Agnes. Later, the land was purchased for recreational use.
The route is partly marked by the modern Keuka Outlet Trail for hiking and biking.