The Tyrone or Coalisland Navigation (as it was locally known) was devised to take advantage of the Coalisland colliers which were first mined in the early part of the 18th century. The navigation would allow coal to be transported to Belfast and Dublin (via Newry) to power the mills and heat the wealthy. The idea for the canal was first touted in 1709 by Thomas Knox, a colliery owner and MP for Dungannon, but support was not forthcoming. In 1727 the scheme was proposed again and in 1729 the Suveyor General, Arthur Dobbs, gave his support to the project; however it was not until 1732 that the Commissioners of Inland Navigation for Ireland authorised commencement of the scheme. Work began in 1733 but did not progress smoothly due to unexpected engineering difficulties and the inexperience of the canal builders themselves. The canal was completed in 1787 some 55yrs after it begun but this was not the end of its problems. A major flaw in the scheme was the location of the collieries at Drumglass, being some three miles to the southwest of the Coalisland basin and situated on much higher ground. This and a lack of sufficient water meant the canal could not be extended to there. Numerous schemes were put forward to extend the canal further to the east and then on to the collieries but cost implications made them untenable. One proposal which seemed set to succeed was the building of a suitable road from Drumglass to Coalisland and a petition to grant money was put to parliament in 1754 but while the money was granted the road was never completed. The solution to the problem was devised by a young Italian engineer named Daviso de Arcort, known locally as Ducart, whereby a system of rollers on inclined planes or ‘dry hurries’ would move lighters up towards the pits without the aid of water. Ducart was granted money to test the plan and in 1777 the first dry lighters successfully arrived at Coalisland.
The scheme to link Lough Neagh with the canal systems in the southern half of Ireland via Lough Erne was first proposed in 1778 and had the support of merchants from Armagh, Monaghan and Fermanagh who saw in it the potential to open their trade to new markets in the south. In 1783 the Irish parliament made a grant towards the costs and work began on the section between Belleek and Ballyshannon (to access the west coast) but stopped in 1792 through lack of funds. In 1814 the scheme was taken up by the Directors General of inland Navigation with the intention of providing employment for the poor, but despite a report being commissioned construction did not commence. In 1825 the Ulster Navigation Company, a private company, was formed to undertake the work though funding issues prevented commencement of work until 1831.The project, supervised by John Killaly, engineer to the Ulster Navigation Company, was set for disaster as an error in calculation meant the width of the locks was set at 12 feet, three feet smaller compared with that of the existing canals. As the lighters on the Belfast, Newry and Coalisland canals were built for the larger lock size this meant they there could not navigate the new canal. This seemingly innocuous miscalculation necessitated transhipment of goods from the larger lighter to smaller lighters specific to the Ulster only and would prove costly in terms of time and money.
The canal reached Lough Erne in 1842 at a cost of £230,000 and incorporated 45miles of navigable water. It had been hoped to link Lough Neagh not only with the west coast at Ballyshannon but also the south of the country via a canal linking Lough Erne and the River Shannon at Belturbet. While work began on this scheme in 1842 it was not completed until 1891. Finally Ireland had a linked canal system. Unfortunately it came too late as the waterways would soon be overtaken by the railways.