Canal Flats, British Columbia, is the small town at the southern end of Columbia Lake, the headwaters of the river. As Ilwaco, Washington, is the closest population center to the mouth of the river (Ilwaco is at 46°18'33" north, 124°02'31" west, and about 14 feet above sea level), Canal Flats is the closest to the headwaters. Its geographic coordinates are 50°09'22" north, 115°48'52" west (map), and its elevation is 2,680 feet above sea level, or about 30 feet above the level of the lake.

It is a unique location, as the Kootenay River flows in a southerly direction along the eastern and southern sections of the town, and the spring-fed wetlands that form the southern shore of Columbia Lake are immediately to the north. A short distance farther north, on the eastern shore of the lake, is Canal Flats Provincial Park. Provincial Highway 93/95 passes to the south and west of Canal Flats after crossing a bridge over the Kootenay.

There is an area on a bluff just south of town where Ktunaxa Indians had a salmon fishing camp; the pits of their shelters are still visible. Some tribal authorities believe this is evidence that the Ktunaxa people fished for salmon in both the Kootenay and Columbia rivers and used this location as a base, but there is no evidence — middens of salmon bones, for example — that salmon ever were in the Kootenay.

According to the BC Geographical Names Office, David Thompson named this area McGillivray's Portage, probably in honor of Duncan McGillivray, his friend and partner in the North West Company who died in 1808, the year Thompson arrived in the area, and for whom Thompson also named the south-flowing river (the name later was changed to Kootenay). Two of McGillivray’s brothers also were North West Company employees, and so it isn’t clear that Duncan was the namesake although historians believe he was the most likely choice.

Pierre-Jean DeSmet, the Catholic missionary and explorer, traveled through the area in 1845-46 and later wrote that after baptizing an Indian named Morigeau, his seven children and the children of three other Indian families, a cross was erected on the plain south of Columbia Lake where the town stands today and the area afterward was called the Plain of the Nativity. Later, William Adolph Baillie-Grohman, the English adventurer, author and investor, who built a canal linking the Kootenay and Columbia rivers, opened a post office at his construction camp, named Grohman, in 1888, the year he completed the canal (See visionaries for a profile of Baillie-Grohman). The post office closed in 1890. The name Canal Flats appears to have been adopted over time by people living in the area; the name first appeared on a British Columbia map in 1909.