[3] On 20 August 1941, just prior to the outbreak of the war in the Pacific, Lt Cdr Harada Hakue is appointed commanding officer.

On 9 January 1942 while on patrol in the Java Sea she torpedoed, shelled and sank the 1,003-ton Dutch steamship Benkoelen that was en route from Soemenep to Cheribon at 04-50S, 112-50E.

On 14 January 1942 at 0217 (JST) in the Indian Ocean west of the Mentawai Islands at 00-12S, 97-00E she torpedoed and sank the 5,102-ton British-Indian armed merchant Jalarahan which was en route from Singapore to Calcutta.

A short time later she suffered storm damage and was forced to return to Penang having avoided a searching flying boat and British destroyer.

In January she was sent to bombard Geraldton, Western Australia, as a diversionary raid to assist with the evacuation of Japanese troops through the Sunda Strait.

After narrowly avoiding patrolling destroyers and aircraft Kennosuke decided to attack nearby Port Gregory instead.

He mistook the local fish cannery for an ammunition plant and bombarded it with 10 shells from the submarines Type 88 4.7-inch (119 mm) deck gun.

At 08:00 on 18 March[4] I-165 fired two torpedoes at the British 3,916-gross register ton armed merchant ship Nancy Moller, which had left Durban, South Africa, on 28 February bound for Colombo, Ceylon, with a full cargo of coal[5] and had received directions from the British Admiralty the previous day to alter course to the east to avoid an area 300 to 350 nautical miles (560 to 650 km; 350 to 400 mi) south-southwest of Ceylon in which the Japanese submarine I-162 had sunk the British steamer SS Fort MacLeod on 3 March, a diversion which inadvertently took her into I-165′s patrol area.

[8] A member of I-165′s crew called out from her conning tower for Nancy Moller′s captain and chief engineer to identify themselves, but received no response.

[9] I-165 came alongside a raft and interrogated its occupants about the whereabouts of the captain and chief engineer, receiving the standard response that both had died in the sinking, as Allied merchant ship crews were trained to do.

[9] I-165′s crew then brought the raft's six occupants aboard, took gunlayer Dennis Fryer below as a prisoner-of-war, forced the other five men from the raft — two Chinese and three Indian sailors — to kneel on deck, shot the two Chinese in the back and kicked them overboard, and pushed the three Indians overboard without shooting them.

[10] For the remainder of I-165′s patrol, the Japanese subjected Fryer to harsh, continuous questioning, and after I-165 returned to Penang, he was imprisoned there and placed on a starvation diet for three months,[11] then transferred to a jail in Singapore, from which he was freed at the end of the war.

Converted to a Kaiten mother ship and fitted with Type 3 Mark 1 Model 3 "13-Go" air-search radar, she was returned to active service with the 6th Fleet's Submarine Division 34.