The second USS Palos (PG-16), a shallow draft gunboat built for service on the Yangtze River, China, was pre-constructed at Mare Island Navy Yard in 1912; dismantled and shipped to Shanghai, China: laid down by the Shanghai Dock and Engineering Co., on 28 April 1913; launched on 23 April 1914; sponsored by Mrs. Lee S. Border, wife of Naval Constructor Border who supervised the gunboat's construction; and commissioned on 24 June 1914.

One of two light draft warships designed for service on the Upper Yangtze River over 900 miles (1,400 km) inland,[1] Palos departed Shanghai on 29 June to begin patrolling.

Steaming upriver through steep gorges and swift rapids, the gunboat became the first U.S. warship to reach Chongqing, 1,300 miles (2,100 km) from the sea, on 28 August.

In the period of great unrest in central China in the 1920s, Palos was especially busy patrolling the upper Yangtze against bands of warlord soldiers and outlaws.

Basing out of Shanghai, Palos cruised the lower Yangtze and its tributaries, making less frequent patrols to the upper river except when unrest required additional naval presence.