The map is set in a historic Italian city built alongside canals. The Terrorists' targets are two important tourist attractions.
Canals is based on real-world environments and the idea for the map Canals originally came to Iikka Keränen after visiting Venice. Originally, the map was called de_venice but despite the shared name, it was not related to the earlier cancelled Venice map by Ido Magal. The aesthetics were intentionally given a clean and uncluttered look despite the real-world influence to enhance player visibility.
Behind the scenes
All prop models and textures related to the map are stored in folders called either de_venice or de_tvstation. Additionally, graffiti textures bear the prefix "venice" in their names.
Existence of the map was hinted in the game files 5 months before its official release. The first reference was added in the June 15, 2016 update where ambient sounds were referred to in the Inferno sound manifest. Later, in the October 10, 2016 update, a reference to the map name de_canals was added to the mapautocompile.txt file.
Rebuilt tunnel stairs area with smoother movement.
Fixed boat geometry overlapping a pier at CT spawn.
Fixed box intersecting windowsill at B.
Fixed pixelwalk on railing at CT spawn.
Moved plywood down on scaffolding below B to block a bad sightline.
Fixed sticky scaffolding clip brush below B.
Fixed some fade distance pop-up issues.
Added two picnic chairs at short and made clips smoother.
Removed lamp at ivy/garbage.
The map recreates the general area around the Piazza San Marco (also known as the St. Mark's Square) in Venice. Recreated landmarks include the Palazzo Ducale, the Ponte dei Sospiri, the Basilica di San Marco, the Campanile di San Marco, the Torre dell'Orologio, the Colonne di San Marco e San Todaro, and the Chiesa di San Giorgio Maggiore on the opposite side of the river. 
The map includes graffiti based on real graffiti located near the recreated locations.