The British established a light on the roof of the French Castle in 1781. This light remained in service until 1796, when it was discontinued by the Americans. The tower was dismantled in approximately 1803.

A new beacon was established in 1823. A wooden tower was built on the roof of the castle. The Erie Canal (1825) and Welland Canal (1829), which bypassed the area, greatly reduced commercial traffic past the fort. In particular, the Welland Canal bypassed the Niagara River entirely, opening up direct travel between Lakes Erie and Ontario. (Previously, vessels would have needed to bypass Niagara Falls.)

In 1872, the light was replaced by the current structure, an octagonal gray stone tower outside the fort. The tower was originally 50 feet high. In 1900, the tower height was increased by 11 feet (above the protruding ring of arches on the present tower). The new space below the lantern room served as a keeper's watch-room, and the light was visible for 25 miles.

The Coast Guard discontinued the light on May 13, 1993. The lighthouse is currently leased to the Old Fort Niagara Association, which maintains the light as a museum and gift shop.