This narrow alley's name was in general usage from the late 1800s. Its one of the few lanes from the Rocks which survived the clean-up and mass demolitions after the Bubonic Plague of 1901. Originally Reynold's Lane, its nickname dates from the opening of the Suez Canal in Egypt in 1869; the laneway being a thoroughfare between two separate sections of The Rocks.
Notorious as one of the most unsavoury places in Sydney in its time, it was the haunt of prostitutes and larrikins. A blind alleyway off it behind 32 Harrington St, was believed to be the site of for blood-sports such as cock-fights and dog fights.