The Exeter canal was built in 1563 which means it predates the canal mania period and is one of the oldest artificial waterways in the UK. It was built to bypass the blocking of the River Exe by the Earls of Devon. The original cut was 3 feet deep and 16 feet wide (0.9 m by 5 m). It ran one and three quarter miles (2.8 km) from just below the Countess weir (this first blockage on the River Exe) to the centre of Exeter through three locks. In 1677 the canal was extended and the entrance was moved downstream to Topsham.

In 1701 the canal was deepened and widened to allow the passage of ocean-going ships. At the same time the number of locks on the canal was reduced to one. Flood gates were also fitted to the canal entrance. These improvements lead to the canal being highly successful until the rise of the railways.

In 1867 competition from the railways resulted in the canal being taken over by its creditors for sixteen years. Despite this the canal was able to make a steady profit for the next hundred years.

The fall of commercial traffic in the 1960's coincided with the rise of leisure use of the canal. The last commercial use of the canal was in 1972, although the government owned water board ran a sludge tanker until 1997 by which time it was privately owned. After some recent difficulties the future of the canal looks good with the city basin being included in part of a 24 million pound redevelopment.