In the mid 18th century the growing towns of Yorkshire including Leeds, Wakefield and Bradford, were trading increasingly. While the Aire and Calder Navigation improved links to the east for Leeds, links to the west were limited and the Bradford merchants wanted to increase the supply of limestone to their coal mines and to export their textiles to the port of Liverpool. On the west coast, traders in the busy port of Liverpool wanted a cheap supply of coal for their shipping and manufacturing businesses and to tap the output from the industrial regions of Lancashire. Inspired by the effectiveness of the wholly-artificial navigation, the Bridgewater Canal opened in 1759-1760. A canal across the Pennines linking Liverpool and Hull (by means of the Aire and Calder Navigation) would have obvious trade benefits.

A public meeting took place at the Sun Inn in Bradford on 2 July 1766 to promote the building of such a canal. John Longbotham was engaged to survey a route. Two groups were set up to promote the scheme, one in Liverpool and one in Bradford. The Liverpool committee was unhappy with the route originally proposed, following the Ribble valley through Preston, considering that it ran too far to the north, missing key towns and the Wigan coalfield. A counter-proposal was produced by John Eyes and Richard Melling, improved by P.P. Burdett, which was rejected by the Bradford committee as too expensive, mainly because of the valley crossing at Burnley. James Brindley was called in to arbitrate, and ruled in favour of Longbotham's more northerly route, though with a branch towards Wigan, a decision which caused some of the Lancashire backers to withdraw their support, and which was subsequently amended over the course of development.

An Act was passed in May 1770 authorising construction, and Brindley was appointed chief engineer and John Longbotham clerk of works; following Brindley's death in 1772, Longbotham carried out both roles.

By 1774 the canal had been completed from Skipton to Shipley, including significant engineering features such as the Bingley Five Rise Locks, Bingley Three Rise Locks and the seven-arch aqueduct over the River Aire. Also completed was the branch to Bradford. On the western side, the section from Liverpool to Newburgh was dug. By the following year the Yorkshire end had been extended to Gargrave, and by 1777 the canal had joined the Aire & Calder Navigation in Leeds and on the western side it reached Wigan by 1781, replacing the earlier and unsatisfactory Douglas Navigation. By now, the subscribed funds and further borrowing had all been spent, and work stopped in 1781 with the completion of the Rufford Branch from Burscough to the River Douglas at Tarleton.

In 1794 an agreement was reached with the Manchester, Bolton & Bury Canal company to create a link near Red Moss near Horwich. The route of the Leeds Liverpool canal was changed, and the planned canal link did not materialize. The Manchester, Bolton & Bury Canal company proposed another link from Bury. This new link would have been known as the Haslingden Canal. The Peel family asked the canal company not to construct the crossing over the River Hyndburn above their textile printworks; such a crossing would have required the construction of embankments, and reduced the water supply to their factories. The Haslingden Canal was never built.

In 1789 Robert Whitworth developed fresh proposals to vary the line of the remaining part of the canal, including a tunnel at Foulridge, lowering the proposed summit level by 40 feet, and a more southerly route in Lancashire. These proposals were authorised by a fresh Act in 1790, together with further fund-raising. In 1794 a further Act was granted authorising yet another change of route, close to that proposed by Burdett, and yet more fund-raising, as Foulridge Tunnel was proving difficult and expensive to dig. It opened in 1796 and was 1,640 yards (1,500 m) long. The new route took the canal south via Burnley and Blackburn, but the latter was not reached until 1810. The latest plan for the route had it running parallel to, and then crossing the isolated southern end of the Lancaster Canal, but common sense prevailed and the Leeds and Liverpool connected with the Lancaster Canal between Wigan and Johnson's Hillock. The main line of the canal was thus completed in 1816.

There had been various unsuccessful negotiations to connect the canal to the Bridgewater Canal at Leigh but agreement was finally reached in 1818 and the connection was opened in 1820, thus giving access to Manchester and the rest of the canal network. The Bridgewater Canal, like most of Brindley's designs was for narrow boats of 72 feet (22 m) length, whereas the Leeds & Liverpool had been designed for broad boats of 62 feet (19 m) length. There was naturally a desire by the narrow boats to reach Liverpool and the locks of the westerly end of the canal were extended to 72 feet (22 m) in 1822.

The canal took almost 40 years to complete, in crossing the Pennines the Leeds & Liverpool had been beaten by the Huddersfield Narrow Canal and the Rochdale Canal. The most important cargo was always coal, with over a million tons/year being delivered to Liverpool in the 1860s, with smaller amounts exported via the old Douglas Navigation. Even in Yorkshire, more coal was carried than limestone. Once the canal was fully open, receipts for carrying merchandise matched those of coal. The heavy industry along its route, together with the decision to build the canal with broad locks, ensured that (unlike the other two trans-Pennine canals) the Leeds and Liverpool competed successfully with the railways throughout the 19th century and remained open through the 20th century.

Trade continued on the canal until as late as the 1980s. Coal was shipped to the power station in Wigan until 1972 and corn to Ainscoughs mill in Burscough until 1960. The last horse drawn barge was 'Parbold' (1960). The especially cold winters in the early 1960s was thought to have finished off commercial use of the main line of the canal, however a load of timber passed over the full length in 1965, from Liverpool to Leeds. Freight returned in 1973 (Coal from Castleford to Skipton), plus various other odd cargoes, then grain was carried between Liverpool and Manchester from 1974 for some years, plus a few loads across the summit -the last being 30 tonnes of herring meal on short boat 'Weaver', from Selby to Manchester (September 1978). The last intensive use of the canal for freight was carriage of effluent from Esholt to Leeds (Knostrop) between May 1978 and December 1979, and aggregate from Trent wharves to Shipley - this ceased in 1982.

Ewood aqueduct carries the canal over the Darwen valley. It is a fine structure, stone built, with a single arch with an outward batter on each side and substantial side walls.