She was laid down on 1 August 1941 as yard number 1044, launched on 15 June 1942 and commissioned on 3 November under Kapitän zur See Werner Hartmann.

The submarine was powered by two MAN M 9 V 40/46 supercharged four-stroke, nine-cylinder diesel engines plus two MWM RS34.5S six-cylinder four-stroke diesel engines for cruising, producing a total of 9,000 metric horsepower (6,620 kW; 8,880 shp) for use while surfaced, two Siemens-Schuckert 2 GU 345/34 double-acting electric motors producing a total of 1,000 shaft horsepower (1,010 PS; 750 kW) for use while submerged.

A little over two months after departing Kiel, U-198 scored her first success of the war, torpedoing and sinking the 4,392 GRT British steam merchant ship Northmoor northeast of Durban on 17 May.

This final torpedo killed the ship's master (who was blown overboard by the blast) and 24 men in a lifeboat that had already abandoned the sinking freighter.

At 13.18 hours the U-boat hit the American Liberty Ship William King with one of two torpedoes as she traveled on a zig-zag course about 200 nmi (370 km; 230 mi) east of Durban.

He and the chief engineer of Dumra were transferred to the German supply ship Charlotte Schliemann and handed over to the Japanese at Batavia (in modern Indonesia) in August.

Both men died in captivity on 18 September 1944 when the Japanese hell ship that was transporting them, Junyo Maru, was sunk by the British submarine HMS Tradewind.

All 40 men aboard survived, although after questioning the survivors, the Germans confiscated the ship's papers and a cashbox containing 682 Egyptian pounds.

U-198 fired two torpedoes at the Dutch steam merchant vessel Mangkalihat which was traveling with convy BC-2, transporting a cargo of copper, sisal and tobacco.

The first two shots missed so the U-boat fired her last torpedo at 18.51 hours, scoring a hit that eventually sank the ship (she foundered on 4 August while under tow).

Oberleutnant zur See Burkhard Heusinger von Waldegg took command on 21 January 1944 and the submarine was transferred from Bordeaux to La Pallice.

Effective anti-aircraft fire drove the attackers off; U-198 received only slight damage in return and continued south to her assigned patrol area.

About a month later, on 15 July, U-198 torpedoed the British steam merchant vessel Director in the Mozambique channel (between the African mainland and Madagascar).

On 12 August 1944, U-198 was depth charged and sunk by the British frigate HMS Findhorn and the Indian Black Swan-class sloop HMIS Godavari in position 03°35′S 52°49′E / 3.583°S 52.817°E / -3.583; 52.817 (near the Seychelles).