"Bluenose" was constructed by Smith and Rhuland in Lunenburg, Nova Scotia. The schooner's keel was laid in 1920. The Governor General the Duke of Devonshire drove a golden spike into the timber during the keel-laying ceremony. She was launched on 26 March 1921, and christened by Audrey Smith, daughter of the shipbuilding Richard Smith. She was built to be a racing ship and fishing vessel, in response to the defeat of the Nova Scotian fishing schooner by the Gloucester, Massachusetts fishing schooner in 1920, in a race sponsored by the "Halifax Herald" newspaper.