As the 1920s came to an end, the Great Depression followed. October 24, 1929, marked the beginning of one of the most significant economic downturns in history, the crash of the American stock market. This sent shockwaves across the globe, hitting the Canadian economy hard, particularly in the Prairies, where severe drought exacerbated already difficult conditions.  

Urban transit saw minimal advances during this period, with development hindered by financial strains and a slowdown in technological development. The economic downturn led to delays in infrastructure projects and innovation took a detour. During this time, traffic decreased, leading to the abandonment of numerous street railways due to deteriorating rolling stock. Facing limited capital, some railways transitioned to motorbuses at the urging of bus manufacturers. Major cities like Toronto, Montréal, and Vancouver, however, were able to invest in new streetcars and upgrade their equipment. 

Urban and rural landscapes began to diverge, resembling distant relatives rather than close neighbours. City centers saw the emergence of newly paved roads and the growing popularity of privately owned automobiles. Asphalt became the preferred road surfacing material, while rural areas continued to rely on dirt roads. 

The Toronto Transportation Commission continued its operations and assumed control of both private and municipally owned street railway companies. Private ownership of transit systems persisted in cities like Halifax, Winnipeg, and Vancouver until the 1950s and beyond. The rise in popularity of private automobiles led to financial challenges as it often came at the expense of public transit ridership, prompting fare increases to cover operating costs.  

Railways played a pivotal role in fostering the growth of rural and small towns, particularly in Western Canada. Led by the Canadian Pacific Railway, these railways facilitated the establishment of numerous communities from Manitoba to British Columbia, connecting them with urban centers through a vast network of secondary lines. In 1925, the Canadian National Railway (CN) established the Canadian National Land Settlement Association to promote immigration and land settlement in Canada. This initiative increased rail traffic and utilized land granted by the federal government. 

Though rail travel remained the preferred mode of transportation for long distances across the country, urban centers were no longer the only spaces being affected by the rise in privately owned automobiles. 

Exciting innovations in transportation were on the horizon beyond the Great Depression era, with the aviation industry poised to elevate the travel experience to new heights. However, the onset of World War II presented significant challenges. Amidst societal, political, and technological upheavals, urban transit was set to experience yet another dramatic shift.