In 1790 there was a proposal for a waterway to link Manchester with Bolton and Bury. In fact the canal was to start at the River Irwell in Salford. One of the land owners, Matthew Fletcher, was the original technical adviser and he was a mining engineer and coal mine owner. The Bill received its royal assent on 13 May 1791.

The canal was opened in 1797 from Bolton and Bury to the Oldfield Road terminus and extended down five locks to the River Irwell in 1808. Originally the canal was built with narrow locks but during construction the locks were altered into broad locks when there was a proposal to link the navigation to the Leeds and Liverpool Canal at Wigan Top Lock which was still being built. The scheme was known as the Red Moss extension. There were also other extension schemes to link the canal at Bury to Sladen (via Rochdale) and across the hills to Church (via Haslingden). None of these schemes was ever begun.

Coal carrying was one of the main reasons for building the canal. A lot of the mines were situated very close to the waterway so that loading was direct from pit head to boat. Lime, limestone, manure, stone, sand and slate were also carried on the canal. Prior to the construction of the railway between Bolton and Manchester passengers and parcels were carried on the packet boats. Later timber was carried in boats and by floating it on the water. Night soil was loaded onto boats from carts at Frederick Road Bridge in Salford and was shovelled through doors in the bridge parapets into the boat below. Unlike the tradition on most other canals the boatmen did not live on the boats; they lived “on the bank”.