Geology

What you see today is not what Niagara Falls was in the past, or will be in the future. During the peak of the last great glaciation, the area of Niagara Falls was covered by over a mile's thickness of glacial ice, which blanketed the region to southern New York, northern Pennsylvania and northern Ohio. As the ice retreated from the area around 16,000 years ago, waters draining the newly gouged out Great Lakes searched along a long escarpment extending through western New York to southern Ontario and beyond, for a low place to flow over.

Approximately 12,000 years ago water found a single low pathway through the "Niagara Escarpment", and began to carve out a channel—the Niagara River. At that time, however, "Niagara Falls" was about seven miles downstream— Lewiston, NY and Queenston, Ontario. Over the last 12,000 years erosion of the resistant rocks that cap Niagara has allowed the Falls to migrate about 7 miles upstream, and form the high-walled Niagara Gorge along its former path. 

Even today, Niagara Falls is estimated to be migrating upstream, on the order of one foot per year. At current rates of erosion and migration, the falls may reach softer, more easily erodible rocks (including shale and rock salt) upstream in about 15,000 years, leading to the end of a major waterfall along the Niagara River. And by some estimates, the river will erode back to Lake Erie in roughly 50,000 years, and after cutting through a second escarpment of resistant rocks (the Onondaga Limestone), it will erode through soft shales, and begin to very slowly drain Lake Erie.

The rocks that are seen in the falls were deposited in a shallow sea that covered much of the eastern U.S. and adjacent Canada between about 440 and 425 million years ago (middle part of the Silurian geologic period). Slightly older rocks, visible downstream through the Niagara Gorge, were deposited along a coastal area, sometimes below sea level, and sometimes on land.

These sedimentary rocks, such as limestone, shale, sandstone and dolostone, are seen as distinct layers in the falls and along the gorge. Some of the rock layers, such as the soft, easily eroded Rochester Shale below the cap of Niagara Falls, contain a great diversity of marine fossils, such as brachiopods, trilobites, corals and crinoids.

The Niagara Escarpment is a prominent cliff-forming escarpment that extends from western New York into southern Ontario, northward to the upper peninsula of Michigan, and then bends downward into eastern Wisconsin and Illinois. The escarpment is capped by relatively hard, resistant rocks of the Silurian-age Lockport Group (chiefly dolostones and limestones), which are underlain by less resistant rocks (shales and limestones, like the fossiliferous Rochester Shale).

The rocks visible at Niagara Falls were deposited in a shallow seaway that covered much of the eastern U.S. during the Silurian Period. Older Silurian rocks below the river level were variously deposited in shallow seas to lowlands. At the bottom of the river channel, even older red shales and sandstones of the Ordovician Period (Queenston Formation) were deposited on land, during a major fall in global sea level. An erosion surface, with a few million years of time missing, occurs at the contact of the Ordovician and Silurian rocks.

The erosional retreat of the falls upstream is slower today than in the past, largely due to withdrawal of waters from the Niagara River for hydro-electric power generation. Retreat for the last 500+ years was between three to five feet per year; the rate now is estimated to be about one foot per year. Climate change models predict drier conditions in the Great Lakes watershed in the future, potentially slowing the rate of erosion and retreat of Niagara Falls.

Acknowledgements:
Thanks to John Rozell and Angela Berti of NYS Parks, Recreation and Historic Preservation, Craig Williams (historian, NY State Museum), and W. Dickerson, for additional images.

There are many websites with general info about Niagara Falls. Here are links to some that focus on its geolog:

Niagara Falls Facts and Figures, from the Niagara Park Commission, Government of the Province of Ontario, Canada
http://www.niagaraparks.com/media/geology-facts-figures.html 

Origins of Niagara from niagarafrontier.com:
http://www.niagarafrontier.com/origins.html

Wikipedia: http://en.wikipedia.org/wiki/Niagara_Falls 

Niagara Falls geology fieldtrip article, from the 2005 Binghamton Geomorphology Symposium: http://www.geog.buffalo.edu/~rensch/binghamton/BGS%202005%20Field%20Guid...
Free Download of the old New York State Museum Bulletin on Niagara Falls: Grabau, A.W., 1901, Geology and Paleontology of Niagara Falls and Vicinity. New York State Museum Bulletin #45, 284 pages. (Note: Some interpretations and names of rock units and fossils have been revised since 1901, but Grabau's observations and other information are still valid and insightful) http://nysl.nysed.gov/uhtbin/cgisirsi/?ps=YTcPAQ6AtK/NYSL/278440094/523/...

A more modern perspective on the geology of Niagara Falls is found in Colossal Cataract: The Geologic History of Niagara Falls, by I.H. Tesmer and J.C. Bastedo (1981, State University of New York Press, Albany, 219 p.). A briefer geological overview of the post-glacial and Paleozoic history of Niagara Falls and Niagara Gorge can be found in C.E. Brett and P.E. Calkin (1987, Niagara Falls and Gorge, New York-Ontario. Geological Society of America, Denver, Centennial Field Guide, p. 97-105).