The backwaters of Kerala supported a much efficient transport system during the earlier times. With the help of the network in the backwaters, people transported goods from north to south of Kerala. And Varkala was on the southernmost part of this canal. The travelers had to get down at Varkala and then walk a short distance to start traveling through the backwaters, leading to Thiruvananthapuram. To overcome this problem, in the 19th century, the British constructed a tunnel, Varkala Tunnel.

The construction began in 1867 under Travancore Diwan Sir. T Mahadeva Rao and was completed at the time of Diwan Sheshaya Sasthri in 1880. It took about 14 years to complete.

The construction of the Varkala Tunnel was one of the major development works of Travancore and entire Kerala during that period. It consists of two tunnels. The first, which is about 2370 feet, was completed in 1877. While the second one, about 1140 feet, was completed in 1880.

People extensively used the tunnel to ferry several kinds of goods after the completion of the construction work. Hence, it was an important achievement as with its construction, water transportation from Tirur (of Malabar) to Trivandrum came into reality.

Further, Mayoora Sandesham, a messenger poem in Malayalam, mentions the Varkala tunnel in it. Kerala Varma Valiya Koyi Thampuran, the poet, talks about the town of Varkala and the tunnel built by the British there. But, with the advancement in transportation through road, rail, and sky, the transport through Varkala tunnel has almost become negligible.