Budgetary problems delayed her completion until 1869, and she first entered service during the Franco-Prussian War in 1870, though she saw no significant action against the French Navy.

The Camäleon-class gunboats came about as a result of a program to strengthen the Prussian Navy in the late 1850s in the aftermath of the dissolution of the Reichsflotte and in the midst of rising tensions with Denmark.

In 1859, Prince Regent Wilhelm approved a construction program for some fifty-two gunboats to be built over the next fifteen years, of which eight became the Camäleon class.

[2][3] Drache was laid down at the Königliche Werft (Royal Dockyard) in Danzig on 27 July 1861; she was not launched until 3 August 1865, owing to constitutional disputes over the budget, which delayed construction of the gunboat.

[5] Drache's completion was similarly delayed by budgetary problems, and she was finally delivered to the navy at its base at Dänholm off Stralsund in late April 1869.

The year 1883 saw similar service, along with fishery protection operations in the North Sea; this had become increasingly important due to the rising number of foreign boats illegally fishing in German waters.

The oceanographic data Drache had gathered over the previous fifteen proved to be indispensable to German U-boat crews and mining operations during World War I.

She was towed through the Eider Canal in 1888 and was sunk by the torpedo boat D5 in a demonstration for Vizeadmiral (Vice Admiral) Max von der Goltz.