The Erie Canal's completion in 1825 transformed transportation between the Great Lakes and Atlantic Ocean, but it did not eliminate the need to portage around Niagara Falls.
The Erie Canal bypassed Niagara Falls entirely by connecting Lake Erie (Buffalo) to the Hudson River (Albany) via a route south of the falls. However, the portage around Niagara Falls remained necessary for vessels traveling between Lake Erie and Lake Ontario—the two Great Lakes directly separated by the falls.
The Welland Canal (first opened 1829, in present form 1932) ultimately provided the navigable bypass between Lakes Erie and Ontario, eliminating the Niagara portage. The Erie Canal and Welland Canal served different segments of the Great Lakes–Atlantic system.
This distinction is often tested in US history examinations. The Erie Canal connected the Great Lakes system to the Atlantic; the Welland Canal connected the Great Lakes to each other past Niagara Falls.