Niagara was launched by New York Navy Yard on 23 February 1855; sponsored by Miss Annie C. O'Donnell; and commissioned on 6 April 1857, with Captain William L. Hudson in command.

On arrival in England, Niagara was equipped to lay cable for the first transatlantic telegraph, which was to follow the shallow tableland discovered between Newfoundland and Ireland by Matthew F. Maury.

The ships returned to Plymouth to fit out, then made a mid-ocean rendezvous on 29 July, spliced their cable ends and each sailed toward her own continent.

On 21 August, the USS Dolphin captured the slave ship Echo off Cuba with men, women, and children taken from Kabenda, Guinea.

Leaving New York on 30 June, Niagara called in Porto Grande, Cape Verde Islands; São Paulo-de-Loande (now Luanda), Angola; Batavia (now Djakarta), Java; and Hong Kong .

[4] Through the summer she gave similar service at Mobile Bay, and was at Fort Pickens, Florida on 22 September when Flag Officer William McKean in Niagara took command of the East Gulf Blockading Squadron.

In February and March, with USS Sacramento she lay at Ferrol, Spain, to prevent Confederate ironclad Stonewall from departing, but the much more powerful southern ship was able to make good her escape.