Niagara was constructed from 1812 to 1813 to protect the vulnerable American coastline on Lake Erie from the British and played a pivotal role in the battle for the lake. Along with most warships that served in the war, Niagara was sunk for preservation on Presque Isle in 1820. Raised in 1913, it was rebuilt for the centennial of the Battle of Lake Erie. After deteriorating, the restoration of Niagara was started again in the 1930s, but was hampered by the lack of funds caused by the Great Depression and remained uncompleted until 1963. A more extensive restoration was carried out in 1988 in which much of the original ship was largely destroyed. The incorporation of new materials and modern equipment makes it ambiguous as to whether it is or is not a replica.
In 1981, the Flagship Niagara League was formed with intent of reconstructing Niagara so that it would be a working ship, instead of an “outdoor museum piece”. The League was eventually incorporated as a non-profit organization associated with the Pennsylvania Historical and Museum Commission. Melbourne Smith, builder of the schooner Pride of Baltimore, was hired in 1986 by the Pennsylvania Historical and Museum Commission to head the reconstruction. The decay of Niagara was so bad that it was dismantled and ultimately destroyed, with various timbers salvaged and used in non-structural areas of the ship. The destruction of the old ship and use of new wood often leads Niagara to be considered a replica. While the first Niagara was built hurriedly, the new Niagara was built out of properly seasoned and preserved yellow pine and Douglas fir. The new Niagara was launched on 10 September 1988, but was not completed until 18 July 1990 when its sea trials were held. The Pennsylvania General Assembly designated Niagara as the official flagship of Pennsylvania on 29 April 1988 and described its purpose as being a “sailing ambassador for Pennsylvania”. In March 2008, the yellow pine mainmast was replaced with one of Douglas fir.
The United States Coast Guard certified Niagara as a Sailing School Vessel in August 2005. For safety reasons, Niagara was equipped with modern equipment such as auxiliary diesel engines, lifeboats, radar, LORAN and radio. In 2009, the Flagship Niagara League assumed day-to-day management of Niagara after a decision by the Pennsylvania Historical and Museum Commission to cut $250,000 to fill a budget deficit. As part of the bicentennial of the Battle of Lake Erie, Niagara took part in a reenactment of the battle on 2 September 2013 in Put-In-Bay along with 16 other tall ships.
