Work began in October of that year on the bank across the Neuse River (her namesake) from the small village of Whitehall, North Carolina (present day Seven Springs).

This situation was compounded by the Confederate Army exercising priority over the Navy in the use of the South's inadequate railroad system for transporting vital war material.

Launched in November 1863 while still needing fitting out, Neuse finally got up steam in April 1864 for duty on the inland waters of North Carolina as part of the force under Commander R. F. Pinkney, CSN.

Shortly thereafter, the ironclad grounded off Kinston due to her mostly inexperienced crew, which had been conscripted from the Confederate Army; she remained fast in the mud for almost a month until finally being refloated.

Neuse burned to just below her waterline and then sank into the river mud preventing capture by the rapidly advancing Union Army forces, commanded by Major General John M. Schofield.

At some point following the war, her sunken hulk, lying in shallow river water and mud, was salvaged of its valuable metals: cannon, carriages and their fittings, anchors, iron ram, casemate armor, both propellers and their shafts, and her steam power plant.