The nebula was discovered on 5 September 1784 by William Herschel. He described the western end of the nebula as "Extended; passes thro' 52 Cygni... near 2 degree in length", and described the eastern end as "Branching nebulosity ... The following part divides into several streams uniting again towards the south."

When finely resolved, some parts of the nebula appear to be rope-like filaments. The standard explanation is that the shock waves are so thin, less than one part in 50,000 of the radius, that the shell is visible only when viewed exactly edge-on, giving the shell the appearance of a filament. At the estimated distance of 2400 light-years, the nebula has a radius of 65 light-years (a diameter of 130 light-years). The thickness of each filament is 1⁄50,000th of the radius, or about 4 billion miles, roughly the distance from Earth to Pluto. Undulations in the surface of the shell lead to multiple filamentary images, which appear to be intertwined.

Even though the nebula has a relatively bright integrated magnitude of 7, it is spread over so large an area that the surface brightness is quite low, so the nebula is notorious among astronomers as being difficult to see. However, an observer can see the nebula clearly in a telescope using an O-III astronomical filter isolating the wavelength of light from doubly ionized oxygen), as almost all light from this nebula is emitted at this wavelength. An 8-inch (200 mm) telescope equipped with an O-III filter shows the delicate lacework apparent in photographs. Smaller telescopes with an O-III filter can show the nebula as well, and some argue that it can be seen without any optical aid except an O-III filter held up to the eye.

The brighter segments of the nebula have the New General Catalogue designations NGC 6960, 6974, 6979, 6992, and 6995. The easiest segment to find is 6960, which runs behind 52 Cygni, a star that can be seen with the naked eye. NGC 6992 & 6995 are objects on the eastern side of the loop which are also relatively easy to see. NGC 6974 and NGC 6979 are visible as knots in an area of nebulosity along the northern rim. Pickering's Triangle is much fainter, and has no NGC number (though 6979 is occasionally used to refer to it). It was discovered photographically in 1904 by Williamina Fleming (after the New General Catalogue was published), but credit went to Edward Charles Pickering, the director of her observatory, as was the custom of the day.

The Veil Nebula is expanding at a velocity of about 1.5 million kilometers per hour. Using images taken by the Hubble Space Telescope between 1997 and 2015, the expansion of the Veil Nebula has been directly observed.