D-2′s keel was laid down by Fore River Shipbuilding Company in Quincy, Massachusetts, under a subcontract from Electric Boat Company of Groton, Connecticut, as Grayling, making her the first ship of the U.S. Navy to be named for the Arctic grayling, a fresh-water game fish closely related to the trout.

While patrolling outside Naval Station Newport, Rhode Island, just 3 nautical miles (5.6 km; 3.5 mi) east of Point Judith shortly before 14:00 on 7 October 1916, D-2 discovered the Imperial German Navy submarine SM U-53 under the command of Hans Rose heading towards Newport, Rhode Island, as part of her hitherto unprecedented two-way traversal of the Atlantic Ocean without refueling or resupply.

Lieutenant G. C. Fulker, USN, commanding officer of D-2, brought his submarine up close to U-53 on a parallel course to escort U-53 while in sight of land.

As the submarines reached the Brenton Reef Lightship, Rose requested permission from D-2 to enter port at Newport.

"[1] After the United States entered World War I on the side of the Allies on 6 April 1917, D-2 served in training and experimental work at New London, Connecticut.