The area surrounding the station, which constitutes the town centre of Rotherhithe, has increasingly become known as Canada Water, owing to both the transportation interchange and the body of water itself.

The lake derives its name from the former Canada Dock, of which Canada Water represents the surviving northern portion. The dock primarily served ships from Canada. Like much of the Docklands, the Surrey Commercial Docks ceased operations in the 1970s. In the 1980s, the London Docklands Development Corporation took charge and invested significantly in the area’s redevelopment. Approximately half of Canada Dock was filled in, and the Surrey Quays Shopping Centre was constructed atop it. The remaining section was transformed into the present lake and wildlife sanctuary. An ornamental canal called Albion Channel was created, connecting Canada Water to Surrey Water, with the excavated soil used to form Stave Hill in the nearby Russia Dock Woodland.

After the earlier gentrification of the riverside parts of Rotherhithe, the extension of the Jubilee Line in 1999 shifted the focus to the immediate vicinity of Canada Water. The opening of the new Canada Water tube station provided rapid connections to the rest of London, with Canary Wharf just one stop away, Westminster reachable in under 10 minutes, and Bond Street around 15 minutes away by underground train. The station’s integration with the London Overground network in 2010 further facilitated quick access to the City of London, with a journey of approximately 10 minutes to Shoreditch High Street station.

The area experienced a phase of rapid development, including the construction of new residential complexes, the opening of a new library in November 2011, plans for cafes and restaurants around the lake, and proposals to revitalize the shopping mall as an initial step towards establishing a more traditional town centre.

Canada Water is the only freshwater body in London Docklands. The lake is now kept replenished with fresh water using a wind pump. This arrangement was implemented following research by Landscape Architect Fraser Borwick, which revealed that groundwater had historically been extracted using wind power to supply various industrial processes. After examining the borehole results from the Jubilee Line construction team, it was determined that significant amounts of potable water were available. An 80-meter borehole was drilled, with 60 meters lined and the remaining 20 meters into chalk. The investigation into how to best maintain a fresh water supply for the lake was prompted by damage to the lining of the old dock during construction in the 1980s. Another considered solution involved sourcing water from the flooded tunnels of the London Underground, but it was deemed too risky.

Canada Water station is situated on the Jubilee Line and the London Overground, serving as an interchange point between the two lines. Originally intended to be a stop on the abandoned Fleet Line Extension to Thamesmead, the extension was never realized. However, Canada Water became the only planned Fleet Line Extension station that was ultimately built as part of the Jubilee Line Extension.

The station opened on 19 August 1999, initially served by East London line trains. Jubilee Line passenger service from the station commenced on 17 September 1999. London Overground services began on the East London Line on 27 April 2010, as the replacement extension of the historic tube line.