An underwater tunnel system for vehicular traffic flow, including rail, automobile and truck traffic connecting the shores of opposed land masses separated by a body of water draws heavily from submarine, manufacturing and modular construction technology. It is environmentally benign and will not adversely dominate the skyline of the surrounding region. The system of the invention requires minimal, if any, dredging to insure its substantially level installation. A compensating ducting and valve system is utilized for initial tunnel submergence during construction and to provide dynamic stability subsequently during operation. Part of the ducting system utilized during submergence operations is also subsequently used for ventilation airflow throughout the tunnel system during operation. During operation, fresh air is introduced from both shores into the tunnel system and exhaust air may be selectively discharged at both shores or from the tunnel system at a location distant from both shores.