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Canal City was a large city on Notak where the Unknown Thief attempted to destroy the Protopet with items from one of the city's major factories. It was also the place where Ratchet would discover the coordinates to Slim Cognito's Ship Shack.
Ratchet would encounter a sizeable Thugs-4-Less force in Canal City, which he would have to defeat to gain access to the Chemical Factory from which the Thief had ordered a series of hazardous products to try to dispose of the Protopet he had stolen.
The Thugs that The Thief hired to protect himself in Canal City were notably more skilled than the ones he hired to overpower the Maktar Resort, as they used deadlier weapons, combat aircrafts, and even some stealth techniques, like hiding themselves among the mannequins displated in the city's shops or behind large canisters and attacking Ratchet when he was close.
Architecture and landscape
The city was filled with canals and rivers that connected with the oceanside, so boats were a major form of transportation. Hoverships were also a frequent site in Canal City. There were also plenty of factories, stores and attractive fountains surrounded by greenery, giving the city a wealthy, civilised and industrious look, not unlike Megapolis.
Ratchet & Clank: Up Your Arsenal
Behind the scenes
Ratchet and Clank broke the fourth wall at the Canal City when Clank said that they always seemed to be a bit late, then they stare at the player.
Changes during development
Citizens were supposed to walk around the opening area of Canal City, and would walk into an energy door where they would teleport away. They were cut due to time restraints.