She was laid down on 20 May 1943 by Blohm & Voss in Hamburg, Germany, and commissioned on 15 June 1944 with Oberleutnant Wolfgang Strenger in command.

The submarine was powered by two Germaniawerft F46 four-stroke, six-cylinder supercharged diesel engines producing a total of 2,800 to 3,200 metric horsepower (2,060 to 2,350 kW; 2,760 to 3,160 shp) for use while surfaced, two Brown, Boveri & Cie GG UB 720/8 double-acting electric motors producing a total of 750 metric horsepower (550 kW; 740 shp) for use while submerged.

[2] When submerged, the boat could operate for 80 nautical miles (150 km; 92 mi) at 4 knots (7.4 km/h; 4.6 mph); when surfaced, she could travel 8,500 nautical miles (15,700 km; 9,800 mi) at 10 knots (19 km/h; 12 mph).

By that time, she had moved from Kiel to her later location in Bergen via a stopover in Horten Naval Base.

After leaving on 25 March 1945 for her first patrol, U-1023 intercepted and attacked Riverton, a 7,345 GRT British steam merchant on 23 April.

Later, on 7 May 1945, the last day of the war in Europe, U-1023 found the 335 tons Norwegian minesweeper HNoMS NYMS 382, which was sunk with 22 dead.

[4] After the war she was paraded up the west coast of the UK visiting a number of ports including Plymouth, Brixham, Falmouth, Bristol, Swansea, Liverpool, Holyhead, Manchester, Fleetwood, Belfast, Glasgow, Greenock, Rothsay, Oban.