Statistics Canada released the trade data on Friday. Canada's trade deficit narrowed to C$0.59 billion in December from a deficit of C$1.59 billion in November. November's figure was revised up from a deficit of C$1.99 billion.
Analysts had expected a trade deficit of C$2.2 billion.
The decline in deficit was driven by a rise in exports. Exports climbed 3.9% in December.
Exports of aircraft and other transportation equipment and parts jumped by 26.4% in December, exports of consumer goods increased 6.4%, exports of metal ores and non-metallic minerals fell by 20.1%, while exports of metal and non-metallic mineral product were up 8.5%.
Imports rose 1.6% in December.
Imports of metal and non-metallic mineral products climbed by 5.4% in December, imports of electronic and electrical equipment and parts gained 2.3%, imports of consumer goods rose 2.0%, while imports of energy products increased 7.9%.
In 2015 as whole, the trade deficit was C$23.3 billion, down from a surplus of C$4.8 billion in 2014. Exports fell 0.9% in 2015, while imports rose 4.4%.