The canal connecting the River Witham to Horncastle was proposed to aid the development of communications and trade for the town and surrounding villages.

A company, Horncastle Navigation, was created in 1792 to construct and operate the canal. Work started in 1793 but owing to numerous construction and supply difficulties the Canal was not completed until 1802.

The Canal, 11 miles in length with a fall of 84ft, had a total of 12 locks. The ease of transportation by the opening of the Canal had a beneficial effect on the town in the 1800s until its closure in 1889.