River and canal encroachments have become a common problem in Bangladesh. The prevalence of river and canal encroachments has a direct impact on population growth. However, the impacted population appears to be unaware of its negative consequences. To this end, we aimed to investigate the past and present canal scenarios with a focus on canal encroachment as the influencing factor in Ulipur upazila (highly vulnerable) of northern Bangladesh. To examine the impact of this encroachment, the Flood Vulnerability Index (FVI), Adaptive Capacity Index (ACI) and Economic Vulnerability Index (EVI) were used. Our results showed signs of narrowing of the canal structure of Ulipur upazila in 1982 and 1992, while satellite images from 2002 and 2012 showed the presence of encroachment in the middle and lower parts of the canal. The FVI value for Hatia union was 0.703, indicating that this area was highly vulnerable to flooding. According to the ACI, the Pandul union has a high capacity to cope with flood impact, while the Hatia union has less capacity to cope with flood impact. Conversely, Hatia’s union EVI value was 72.8, denoting a high economic vulnerability. Canal encroachments will have negative consequences for these impacted unions. It is critical to reduce the flooding and economic vulnerabilities associated with canal encroachments. It is found that canal excavation is very important for controlling flood water and reducing the damage caused by flooding.