Otaru Port developed as the gateway to the development of Hokkaido. At that time, large vessels were moored offshore and barges were used to unload cargo, but as the volume of cargo handled increased, it became necessary to make the transportation process more efficient. In order to increase the distance that barges could dock, the Otaru Canal was constructed by reclaiming the sea surface.

Completed in 1923, the Otaru Canal is characterized by its gentle curves rather than straight lines because it was built by reclaiming the offshore area of the coast rather than digging inland. However, as times changed and the postwar period came to an end, its mission came to an end with the construction of wharfs at the port. In 1986, the canal was partially reclaimed after a decade-long dispute over its reclamation, and half of its width became a road, and it was reborn in its present form with walking paths and a town garden.

The total length of the canal is 1140 m. The width of the canal is 20 m along the Rinko Line of the road, while the northern part (commonly known as the North Canal) is 40 m as it was originally. Sixty-three gas lamps have been installed along the walking trail, and a group of stone warehouses along the canal have been reused as restaurants and other facilities, remaining in their original state. At dusk, the stone warehouses are lit up with gas lamps, creating a different atmosphere from that of the daytime.