The grisly discovery was made by an off-duty police officer and his wife while they were out walking their own dogs along the footpath next to the Wolverhampton to Coseley canal at Turtons Croft near Bilston.
After using a stick to pull the dog's body out of the canal the couple contacted the RSPCA.
When the inspector arrived she was unable to establish the sex of the animal - which wasn't microchipped - due to decomposition, however she did notice the dog had what has been described as a "suspicious-looking cut" in a straight line along the entire length of its abdomen.
It's not known how or when the injury occurred, but it's believed the dog was in the water for no more than a couple of days.
RSCPA inspector, Claire Davey, attended the scene and said: “We’d like to thank the policeman and his wife for stopping and taking the time to help this poor dog. As pet owners themselves, it must have been a really upsetting incident for them to come across and we’re very grateful that they reported it to us.
“While it’s possible that this may be someone's missing pet, I’m not ruling out the possibility of foul play, especially given the nasty injury that the dog had sustained. It’s incredibly sad and upsetting to find animals in circumstances like this and we would appeal to anyone with information to come forward.”
The discovery on April 22 is the latest in a series of horrific finds in recent months.
On March 28 a female dog was found dead in a ditch between Brownhills and Great Wyrley with a cable tied around her neck and a shower curtain wrapped around her abdomen
The dog was so badly covered with maggots when she was discovered that she was not recognisable, and due not being microchipped it is not clear who she belonged to.
Ann Bennett from the RSPCA, which is investigating, said: "We don’t know how long the dog was there or even if the ties were used to drag the dog or could have contributed to the cause.
"Whatever has happened, it is very sad and we hope she didn’t suffer.
"At this time we do not know the cause of death or why the dog was dumped so callously in the ditch for people to find.
"We’d like to thank the member of the public who found the dog and treated her with dignity."
The member of the public who found her remains took the dog to a vet. It's believed she was a shar pei cross whippet cream in colour, middle aged with large mammary glands.
One month earlier a female French bulldog was discovered in a bag weighed down with bricks close to the lock on the Walsall Canal at Tipton.
In December, construction workers found three newborn puppies dead in a bin bag - again in the canal at Tipton - while a young male Shih Tzu which had been dumped in a toolbox in the Trent and Mersey canal at Burton upon Trent was also reported the same month.