Commissioned in 1936, Yarra spent the early part of the war in Australian waters, then was transferred to the East Indies Station in 1940.

After operating as part of the Tobruk Ferry Service in the Mediterranean during November, Yarra was reassigned to Southeast Asia in response to Japanese attacks.

On 4 March 1942, Yarra was attacked and sunk by a force of Japanese cruisers and destroyers while attempting to protect ships withdrawing to Australia.

[8] While en route, the convoy was attacked by Japanese aircraft: Yarra shot down one and damaged several others, then rescued over 1,800 soldiers from the burning troopship SS Empress of Asia.

[8] Yarra left the convoy when near Palembang to take up the tow of the disabled destroyer Vendetta, with the two ships successfully reaching Tanjong Priok.

[8] Early on 4 March 1942, the convoy encountered a Japanese fleet: the cruisers Atago, Takao, and Maya, accompanied by four destroyers.

[8] Yarra's commander, Robert William Rankin, laid down a smokescreen, then ordered the convoy to scatter while the sloop held off the Japanese warships.

[9][10] In March 2013, Governor-General Quentin Bryce announced that a Unit Citation for Gallantry would be retroactively awarded to the ship's company of Yarra at the time of her sinking.