He held a number of high posts in the years between the World Wars, including Director of Naval Intelligence (Office of Naval Intelligence), a U.S. representative to arms control conferences, and Commander-in-Chief of the United States Fleet.

He participated in the defeat of Admiral Cervera's Spanish Squadron off Santiago, Cuba and was subsequently commissioned at the rank of Ensign.

He then became Chief of Staff of the American Naval Detachment in Turkey; he witnessed the September 1922 destruction of Smyrna and became one of the US Navy officers who played a major role in protecting and evacuating Armenians and Greeks from the city.

In the years leading up to the Second World War, as it became increasingly clear that international relations were deteriorating, Hepburn was charged with the task of heading the board (eventually known as the "Hepburn Board") which reviewed the United States defense capabilities.

He also later served as a delegate to the Dumbarton Oaks meetings, which established guidelines for founding the United Nations.