Otaru Port developed as the gateway for the pioneering of Hokkaido. At that time, large ships would anchor offshore and use barges to unload cargo, but as the volume of cargo increased, it became necessary to make the transport work more efficient. The "Otaru Canal" was created by reclaiming the sea surface to lengthen the distance where barges could dock.

The Otaru Canal was completed in 1923. It is characterized by its gentle curve rather than being a straight line, as it was built by reclaiming the area off the coast, not by digging inland. However, as times changed after the war, its mission came to an end with the development of the port's wharves. In 1986, after a dispute over reclamation that lasted for more than a decade, part of the canal was filled in. Half of its width became a road, and it was reborn into its current form with a promenade and landscaped gardens.

The total length of the canal is 1140m. The width is 20m in the section along the Rinko Line prefectural road, while the northern part (commonly known as the North Canal) remains at its original 40m. There are 63 gas lamps installed along the promenade, and the stone warehouses along the canal have been preserved in their original state and are now reused as restaurants and other establishments. At dusk, the gas lamps are lit and the stone warehouses are illuminated, creating a different atmosphere from the daytime.