Ponding tests were conducted in the Shiyang River Basin in Northwest China to assess canal leakage characteristics. Four anti-seepage constructions (concrete lining, pebble lining, clay lining plus compacted canal bed, compacted canal bed only) were performed on four canal sections, which were situated in multi-layered soils. The canal sections were tested using a two-stage approach; first a stable water level was maintained followed by a stage where the water level in the canal section was permitted to drop. The canal seepage rate and the soil water content near the canal bed were monitored during the stable and dropping stages. Soil texture, bulk density and hydraulic conductivity were tested in each canal section and soil layer. Double ring infiltration tests were performed to investigate infiltration behaviour from the canal sections. The saturated-unsaturated flow model HYDRUS-2D was applied to simulate canal seepage and the local soil water response. The simulation results compared well with the monitored data, indicating that the model can reliably simulate canal seepage under these complex soil structures and different canal liners. Both experimental results and numerical modelling show that the clay lining plus compacted canal bed provides the best anti-seepage performance, followed by compacted canal bed only, then pebble and concrete lining. Simulation results also predicted that the soil water content was discontinuous at the interface of distinct soil layers, and that the range and form of wetting front varied greatly in the four canal sections, with a larger wetted area for the more permeable canals. Simulations were performed to study the sensitivity on canal seepage of to the permeability of each soil/lining layer and the lining effect on canal seepage. The results, confirmed by double-ring infiltration tests, indicated that the canal lining is not the only dominant factor affecting canal seepage: The soil permeability can also influence the seepage greatly, especially where there exists a low permeability layer (e.g., compacted soil layer) close to the canal.