She was built by John I. Thornycroft & Company at Woolston, Hampshire and commissioned into the RCN on 21 May 1931 at Portsmouth, England.

In late September 1939, she was assigned to the American and West Indies Squadron based at Kingston, Jamaica.

On 23 October 1939, the German-flagged tanker Emmy Friederich scuttled herself on encountering Saguenay in the Yucatán Channel, and thus became the Canadian destroyer's first war conquest.

On 1 December 1940, Saguenay was torpedoed 300 miles (480 km) west of Ireland by the Italian submarine Argo while escorting Convoy HG-47, and managed to return to Barrow-in-Furness, escorted by HMS Highlander, largely under her own power,[2] but with 21 dead and without most of her bow; she was under repair in Greenock until 22 May 1941.

In October 1943 Saguenay was towed to Digby, Nova Scotia, as a tender assigned to HMCS Cornwallis, the Royal Canadian Navy's training depot for new entries (recruits).