The observatory, which housed the first scientific institution in Canada, played a crucial role in a world-wide study of terrestrial magnetism and meteorology. In the early part of the 19th century, scientists began looking closely at the Earth's magnetic fields in relation to weather patterns. The British Government and the Royal Society in London took the lead in this research by establishing four observation stations in Capetown, St. Helena, Tasmania, and Toronto.

The first Toronto observatory, built in 1840, was a primitive log cabin. Researchers measured the direction and intensity of magentic fields, observed weather patterns, and made astronomical observations for time calibrations. Due to the nature of the experiments, the observatory team used extremely sensitive and precise instruments which were made of completely non-magnetic materials, such as brass. Due to the initial successes of the Toronto station, a more permanent, stone observatory was erected in 1855.

From its inception, the observatory contributed fundamental observations to meteorology, terrestrial magnetism and astronomy. Major (later Sir) Edward Sabine, director of the international project, used the data from the Toronto observatory to expose the relations between sunspots and irregular magnetic variations. In the 1880s the observatory participated in the world-wide observations on the transit of Venus and aided in the project to standardize international time.

At the end of the 1890s, new campus buildings crowded the observatory and disturbed the once pristine local environment. In addition, the new electrification of Toronto's street cars interfered with the delicate magnetic observations. The observatory was disassembled in 1907 and moved to its present site beside Hart House. Following the move, the department of Surveying and Geodesy inhabited the observatory until the 1950s. It now houses the offices for the Students' Administrative Council (SAC).

See: Dalton, I. R. and Garland G. D. (1980). "The Old Observatory's Noble History," The Cannon, vol. 3, no. 3, October 31. Located in the University of Toronto Archives. Also see reading files on the "old observatory" at the University of Toronto Archives.