Named after Canal Street, laid out along a covered drainage canal.
In the early 19th century a drainage canal was dug here to carry off water from marshy, eventually sewage-filled ponds, among them Collect Pond; it was covered over in 1819, and Canal Street, completed in 1820, follows its path. The station is also signed Canal Street–Holland Tunnel, after the nearby tunnel named for its initial chief engineer, Clifford Milburn Holland, who died in 1924, before it opened in 1927.