In 1766, an Act was passed by the General Assembly of the colony of North Carolina for joining Clubfoot Creek and Harlow's Creek in Carteret County - from Old Topsail Inlet to the Neuse River. Over the next five decades, more Acts were passed by the colonial then state legislature, but nothing happened until 1820 when Hamilton Fulton surveyed the proposed route. Construction began in 1821.

The canal had a tide control lock at the northern end on the Pamlico Sound to keep water from surging through. This lock allowed small vessels to pass from the freshwater Pamlico Sound into the saltwater Atlantic Ocean after 1827.

The original company had many financial problems and foreclosure came in 1844. In 1849, the company reorganized and resumed operations. The state of North Carolina held some interest in the company until around 1872, even though the original canal was abandoned around 1856.

The 1885 Annual Report of the Albemarle & Chesapeake Canal Company cites incorporation of the Newberne and Beaufort Canal Company acquiring interest of the Clubfoot-Harlow Canal. Newberne and Beaufort Canal Company organized on 11/10/1881 and contracted to the A&C Canal Co. to do the dredging of a new canal next to the old canal. A&C Canal Co. owned 2,500 shares in the Newberne and Beaufort Canal Company. The new canal should be opened 1/1/1885 as dredged by the "Cyclops" from Clubfoot Creek to the site of the old locks at Harlow.

This new company built a totally new canal (now named the Harlow Canal) parallel with and to the east of the old Clubfoot-Harlow Canal, which later came under control of the U.S. Army Corps of Engineers as part of the Intracoastal Waterway.