The first inhabitants of Canada were native Indian peoples, primarily the Inuit (Eskimo). The Norse explorer Leif Eriksson probably reached the shores of Canada (Labrador or Nova Scotia) in 1000, but the history of the white man in the country actually began in 1497, when John Cabot, an Italian in the service of Henry VII of England, reached Newfoundland or Nova Scotia. Canada was taken for France in 1534 by Jacques Cartier. The actual settlement of New France, as it was then called, began in 1604 at Port Royal in what is now Nova Scotia; in 1608, Quebec was founded. France's colonization efforts were not very successful, but French explorers by the end of the 17th century had penetrated beyond the Great Lakes to the western prairies and south along the Mississippi to the Gulf of Mexico. Meanwhile, the English Hudson's Bay Company had been established in 1670. Because of the valuable fisheries and fur trade, a conflict developed between the French and English; in 1713, Newfoundland, Hudson Bay, and Nova Scotia (Acadia) were lost to England. During the Seven Years' War (1756–1763), England extended its conquest, and the British general James Wolfe won his famous victory over Gen. Louis Montcalm outside Quebec on Sept. 13, 1759. The Treaty of Paris in 1763 gave England control.

At that time the population of Canada was almost entirely French, but in the next few decades, thousands of British colonists emigrated to Canada from the British Isles and from the American colonies. In 1849, the right of Canada to self-government was recognized. By the British North America Act of 1867, the dominion of Canada was created through the confederation of Upper and Lower Canada, Nova Scotia, and New Brunswick. In 1869, Canada purchased from the Hudson's Bay Company the vast middle west (Rupert's Land) from which the provinces of Manitoba (1870), Alberta (1905), and Saskatchewan (1905) were later formed. In 1871, British Columbia joined the dominion, and in 1873, Prince Edward Island followed. The country was linked from coast to coast in 1885 by the Canadian Pacific Railway.

During the formative years between 1866 and 1896, the Conservative Party, led by Sir John A. Macdonald, governed the country, except during the years 1873–1878. In 1896 the Liberal Party took over and, under Sir Wilfrid Laurier, an eminent French Canadian, ruled until 1911. By the Statute of Westminster in 1931 the British dominions, including Canada, were formally declared to be partner nations with Britain, “equal in status, in no way subordinate to each other,” and bound together only by allegiance to a common Crown.

Newfoundland became Canada's tenth province on March 31, 1949, following a plebiscite. Canada also includes three territories—the Yukon Territory, the Northwest Territories, and the newest territory, Nunavut. This new territory includes all of the Arctic north of the mainland, Norway having recognized Canadian sovereignty over the Sverdrup Islands in the Arctic in 1931.

The Liberal Party, led by William Lyon Mackenzie King, dominated Canadian politics from 1921 until 1957, when it was succeeded by the Progressive Conservatives. The Liberals, under the leadership of Lester B. Pearson, returned to power in 1963. Pearson remained prime minister until 1968, when he retired and was replaced by a former law professor, Pierre Elliott Trudeau. Trudeau maintained Canada's defensive alliance with the United States but began moving toward a more independent policy in world affairs.

Faced with an increasingly violent separatist movement in the predominantly French province of Quebec, Trudeau introduced the Official Languages Bill, which encouraged bilingualism in the federal government; he also gave an economic portfolio to a French-speaking minister, Jean Chrétien. Both measures increased the power of French-speaking politicians in the federal government.

In 1976, the Parti Québécois (PQ) won the provincial Quebec elections, and René Lévesque became premier. The Quebec government passed Bill 101 in 1977, establishing only the French version of legislation as official, and establishing many rules intended to protect the French-speaking culture; for example, only French was to be used for commercial signs, and for most public school instruction. While this bill still stands as law, many of its provisions were voided in the late 70s and 80s and/or amended in 1993, striking more of a compromise; commercial signs, for example, may now be in French and English, provided that the French lettering is twice the size of the English. Quebec held a referendum on whether the province should seek independence from Canada in May 1980; it was defeated by 60% of the voters.

Resolving a dispute that had occupied Trudeau since the beginning of his tenure, Queen Elizabeth II signed the Constitution Act (also called the Canada Act) in Ottawa on April 17, 1982, thereby cutting the last legal tie between Canada and Britain. The constitution retains Queen Elizabeth as queen of Canada and keeps Canada's membership in the Commonwealth. This constitution was accepted by every province except Quebec.

In the national election on Sept. 4, 1984, the Progressive Conservative Party scored an overwhelming victory, fundamentally changing the country's political landscape. The Conservatives, led by Brian Mulroney, won the highest political majority in Canadian history. The dominant foreign issue was a free-trade pact with the U.S., a treaty bitterly opposed by the Liberal and New Democratic Parties. The conflict led to elections in Nov. 1988 that solidly reelected Mulroney and gave him a mandate to proceed with the agreement.

The issue of separatist sentiments in French-speaking Quebec flared up again in 1990 with the failure of the Meech Lake Accord. The accord was designed to bring Quebec into the constitution while easing its residents' fear of losing their identity within the English-speaking majority by giving it status as a “distinct society.” In an attempt to keep Canada united, the three major political parties came to an agreement in Feb. 1992 on constitutional reforms. Voters in the Northwest Territories authorized the division of their region in two, creating a homeland for the Inuits, which in April 1999 became the territory of Nunavut. Also in 1992, Canada announced its decision to withdraw its combat units from NATO command. The economy continued to be mired in a long recession that many blamed on the free-trade agreement. A national referendum was held in Oct. 1992 on the proposal to change the constitution to ensure greater representation in Parliament for the more populous regions and thereby the French-speaking Quebecers. The referendum, however, was defeated.

Brian Mulroney's popularity continued to decline, causing him to resign before the next election. In June 1993 the governing Progressive Conservative Party chose Defense Minister Kim Campbell as its leader, making her the first female prime minister in Canadian history. The national election in Oct. 1993 resulted in the reemergence of the Liberal Party and the installation of Jean Chrétien as prime minister.

The Quebec referendum on secession in Oct. 1995 yielded a narrow rejection of the proposal, and separatists vowed to try again. Since then, however, the Quebec Liberal Party has replaced the Bloc Québecois as the ruling party.

On April 1, 1999, the Northwest Territories were officially divided to create a new territory in the east that would be governed by Canada's Inuits, who make up 85% of the area's population. Composed of 770,000 sq mi of mostly snow and ice reaching well to the north of the Arctic Circle, the 25,700 residents of Nunavut are governed from the new capital, Iqaluit.

In July 2000, Stockwell Day of the new conservative Canadian Alliance Party unexpectedly emerged as the leader of Canada's opposition. In elections held in Nov. 2000, however, Prime Minister Jean Chrétien of the Liberal Party won a landslide victory of a third five-year term. After the election, the conservatives rapidly lost steam.

In recent years, Canada has introduced some of the world's most liberal social policies. Medical marijuana for the terminally or chronically ill was legalized in 2001; it began legally dispensing marijuana by prescription in July 2003. In 2003, Ontario and British Columbia legalized same-sex marriage; Quebec and the Yukon followed suit in 2004. Same-sex marriage is now legal in provinces and territories representing 75% of Canada's population.

Canada-U.S. relations were strained in 2003 when Canada refused to join Washington's coalition supporting the war in Iraq. In December, Canada was incensed when the U.S. included the country on its list of countries banned from bidding on future reconstruction contracts in Iraq. Despite Canada's opposition to the war in Iraq, it had contributed $240 million to reconstruction efforts in Iraq and sent 2,000 soldiers to Afghanistan. Relations with the United States improved in Jan. 2004 after President Bush reversed the policy.

In December 2003, Chrétien stepped down and handed the prime ministership to the new leader of Canada's Liberal Party, former finance minister Paul Martin. Chrétien had announced in 2002 that he would not seek a fourth term—conflict between Chrétien and Martin had divided and weakened the Liberal Party in recent years. A financial scandal uncovered in Feb. 2004 under Chretien's rule further diminished the party's standing. In June 2004, Martin was reelected prime minister, but the Liberal Party lost its majority in Parliament, which it had held for 11 years.