The prototype turned out to be rather unsuccessful, due to poor seaworthiness outside of coastal areas, difficulty in operating and maintenance of her steam propulsion turbines, poor and outdated armament, and the project was canceled, with development shifting onto a bigger boat (future Pegaso-class escorts) with better armament, and easier to use engines.

In 1935 Albatros was reclassified as a second-line ship, and was assigned to Regia Marina's naval experimental unit at La Spezia.

Strong currents present in the Strait of Messina significantly interfered with the sonar equipment, and its use was severely limited during her active duty.

Albatros also escorted the transatlantic liner SS Rex on her last voyage on 6 June 1940 from Genoa to Trieste and from there on 15 August, to Pula.

On 16 July 1940 Albatros while patrolling off Augusta was spotted and attacked with two torpedoes by the British submarine HMS Phoenix.

After being able to successfully maneuver and avoid torpedoes, Albatros went on a depth charge attack sinking Phoenix with all hands in the position 37°15′N 15°15′E / 37.250°N 15.250°E / 37.250; 15.250.