The high cost of reconstruction and new governmental policy forced the RN to transfer the vessel to the Royal New Zealand Navy (RNZN) in 1956.

The AIO allowed her to operate as a command ship in the northern Atlantic, primarily in hunting German warships Tirpitz and Scharnhorst.

[3] After completion of the work in June, Royalist was ordered to the Mediterranean to support the Operation Dragoon landings in the south of France in August 1944.

[citation needed] From 10 May, Royalist joined a group of carriers during Operation Mitre, which searched for Japanese warships evacuating Nicobar and the Andaman Islands.

[citation needed] Scottish author Alistair MacLean served on Royalist during the war, and used his experiences as background for his acclaimed first novel HMS Ulysses (1955) as well as for some of his subsequent works.

[9] The modernization required the construction of a new superstructure and the addition of a fire control system, with the work planned to only extend the cruiser's lifespan by 6 years.

Newly re-elected Prime Minister Winston Churchill supported the Royal Air Force at the cost of the navy and its budget was cut in 1952.

[10] The shift in policy undermined naval expansions by the outgoing Attlee government and the Navy was forced to cancel upgrades of many ships.

Internal factions within the RNZN and New Zealand government disagreed regarding the roles and doctrine of its Navy, with many unsure how a nuclear-era force should function and the importance of anti-submarine frigates.

[18][19] Those in favour of a new cruiser believed a ship like Royalist would be able to serve an anti-aircraft role in supporting allied operations in the Pacific, alongside the RN and Royal Australian Navy.

When her modifications were complete, New Zealand refused to accept the vessel stating that the poor World War II-era sleeping arrangements and lack of ABC equipment were unsatisfactory.

Controversy over her purchase (and governmental stance) persisted, with the ship being viewed as either a white elephant or the most modern and capable vessel of the RNZN.

[23] As part of the Kiwi half of her refurbishment, Royalist was fitted with a new radar, fire control system, and three 'STAAG 2' 40 millimeter anti-air guns.

[30][31] As New Zealand figured out the nation's stance on the crisis, the cruiser operated with the RN fleet as an air defence radar picket, rescue ship for downed pilots, and as a method to coordinate British aircraft on bombing runs.

At the time, the RN was short of loanable cruisers, so the frigate HMS Blackpool (F77) was transferred to cover the decommissioning of both Royalist and the recently sunk HMAS Voyager.

It was found that her captain ran the ship at excess speed into a head sea in an attempt to make it back to land to watch a Rugby match between the Wallabies and All Blacks.

During these deployments, her age began to show as captains described unserviceable equipment, structural degradation, and below-deck overheating; by now, the ship was already beyond her lifespan and overdue for retirement.

[43] While returning to New Zealand, a boiler and turbine broke down, cancelling a Waitangi Day tour of the country and ending her career five months early.