Canal lining is commonly used to reduce seepage loss and increase water use efficiency. However, few studies have quantitatively estimated the seepage control effects of different lining materials under different service times. Ponding tests were conducted on the same canal section with four different lining statuses to investigate the canal lining effect on seepage control and its impact factors in arid areas. The cracks and holes in different lining materials were surveyed, and the canal seepage rates under the four test treatments were calculated by monitoring the water level change in the canal. The results show that the cracks in the joints of the two precast concrete slabs and holes in the geomembrane, which are located 0.25 m above the canal bottom on two sides of the canal, are responsible for the increased seepage loss. The new concrete and geomembrane lining combination reduces seepage by 86% compared with no lining, while seepage can be reduced by 68% using the concrete and geomembrane lining combination after three service years, and the amount decreases to 11% by using geomembrane lining with a three year service time. Based on the experiment and literature, a statistical relationship between the seepage reduction and lining service time was established, which provided a possible and easy way to estimate seepage losses from lined canals and improve the estimation accuracy using an empirical formula. Without considering the service time lining effect, the seepage loss is underestimated by 58%, and the canal water use efficiency is overestimated.