In 1820, construction began on a canal to navigate the rapids where the Broad River and the Saluda River merge to form the Congaree River in Columbia, South Carolina. The canal started at where is now between Calhoun Street and Richland Street in the Columbia city limits, and it ended across from Granby Landing just north of the current railroad bridges across the Congaree River.

When completed in 1824, it was about twelve (12) feet wide and 2.5 feet deep at the north end and almost eighteen (18) feet wide and four feet deep at the southern end. It had an eight foot wide towpath on each side. The Columbia Canal had four lifting locks and one guard lock for the thirty-four (34) foot descent of its length. A diversion dam was built across the Broad River to allow access from the Saluda Canal. There were three waste weirs to prevent flooding.

A separate canal - the Bull Sluice - was constructed in 1830 north of the Columbia Canal on the Broad River. This 1/2 mile canal had one lock. Intended to bypass Bull Shoals, this short canal utilized a natural channel between Guignard's Island and the east bank. A wing dam and a stone lock with an eight foot lift was constructed. In 1830, in spite of the fact that the inland navigation system was already in serious decline, Columbia merchants insisted on an extension canal to link the Bull Sluice project with the Columbia Canal. The contractor was William McKinsee, and the total cost of the Columbia Canal was $206,000.

In 1840, the State of South Carolina ceased subsidizing the canal. In 1842, the railroad came to Columbia and the traffic on the Columbia Canal decreased significantly. During the U.S. Civil War, the hydraulic power of the canal was used to make gunpowder. Additionally, power generated by the canal was supplied to two grist mills, one run by the State Penitentiary, and a saw mill.

Portions of the early canal south of Gervais Street survive to this day, as does part of the Bull Sluice canal.

During the U.S. Civil War, a portion of the Columbia Canal was leased to the Confederate government. After the War, the canal passed through several owners before reverting to the State.

The Columbia Canal was the most profitable of the South Carolina river canals. In 1833, 66,597 bales of cotton in 1,027 boats passed through the canal. In 1827, an estimated two million dollars in produce and merchandise entered or passed through the canal. This trade was of vital importance to the relatively small town of Columbia. As the Congaree River below Columbia was open to navigation, the larger locks on the Columbia Canal allowed larger and more profitable cargoes to flow between the town and the coast.

In 1888, the Columbia Canal was redesigned as an industrial power source. The new design started at Gervais Street and extended about three and a half (3-1/2) miles north along the Congaree and Broad rivers. It was about 150 feet wide and ten feet deep. This new design included a diversion dam, an entry lock, and a waste weir. It was opened in 1891.

The Columbia Mill was built north of Gervais Street, with a powerhouse on the canal about 600 feet away. This was the first U.S. textile mill to use alternating current (AC) motors.

The Columbia Hydro Plant was built at the southern end of the newly-designed canal. This produced power for industry, the City of Columbia, and the street railrway system. It is still operated by the South Carolina Gas & Electric Company.

The Columbia Canal is listed on the National Register of Historic Places - January 15, 1979.