While patrolling out of Lae on 10 March, she suffered medium damage from strafing attacks, forcing a return to Sasebo for repairs by April.

Once repairs were completed in June, the ship escorted convoys from Moji in Kyūshū back to Rabaul, via the Philippines and Palau.

Yūnagi participated in the Battle of Savo Island from 8–9 August 1942, engaging the destroyer USS Jarvis in combat, but withdrawing without taking any damage.

In July, while at Shortland, Yūnagi was hit by an Allied air strike, which caused medium damage to her hull.

On 2 October, Yūnagi helped provide cover for the evacuation of Japanese troops from Kolombangara and made numerous "Tokyo Express" runs throughout the Solomon Islands through the end of the year.

On 19–20 June, Yūnagi escorted Admiral Jisaburō Ozawa’s 1st Supply Force at the Battle of the Philippine Sea.

From 10–18 August 1944, she escorted a convoy from Moji via Mako towards Manila, but detached to Takao to assist the damaged transport Eiyō Maru.

On her return from Takao to Manila, she was torpedoed and sunk 20 miles (32 km) north-northeast of Cape Bojeador, Luzon at coordinates 18°46′N 120°46′E / 18.767°N 120.767°E / 18.767; 120.767 by the submarine USS Picuda on 25 August 1944, with 32 crewmen killed and 19 wounded.