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Route 126 passes through Falls Village, part of the town of Canaan, and follows the Housatonic River watershed into North Canaan. It's actually part of a historical loose cluster of state routes in the 120s; but nearby Route 124 (near the Massachusetts state line) and Route 129 (New Milford) are now gone.
In the 1920s, State Highway 126 followed today's US 7 between US 1 and Route 35. Until about 1928, US 7 actually followed today's NY 22 outside Connecticut toward New York City.
The exact history of the modern Route 126 still needs some more excavation. 1930s state maps show a route from Route 43 (now Route 63) across US 7, through Falls Village, to end at the intersection of Sand Road and Belden Street. (Today's Point of Rocks Road was originally part of Sand Road.) In Falls Village, Route 126 followed Main Street instead of Brewster Road (its current alignment, one block north).
In 1936, it looks like Route 126 was shifted north to Brewster Road. The old Route 126 became SR 724.
In 1949, a state legislator submitted a bill to include all of Route 126 into the state highway system. Around this time, the signed route (if not the state maintained route) was extended to US 44 in North Canaan.
In the 1951 state highway log, Route 63 was extended through Falls Village to US 44, taking over Route 126 entirely. This probably happened entirely on paper, with no signs being changed; the DOT's "all route changes" spreadsheet and 1952 state highway map do not reflect the Route 63 extension. In the 1952 highway log, Route 63 was back to its terminus at US 7.
In 1971, the town Planning Commission in Falls Village recommended moving Route 126 back to Main Street from Brewster Road. The DOT replied that, if it approved the change, the town would need to eliminate angle parking on Main Street. Possibly for that reason, the change was never made.