[5] S-38 reached Mare Island on 1 August, remained there for repairs and alterations until April 1924, then returned to San Pedro, whence she conducted local exercises into the summer.

She stood into Manila Bay on 4 November 1924 and, for the next 17 years, operated out of Cavite, with annual summer deployments to the China coast.

Initially assigned to patrol in Verde Island Passage, she shifted to the west coast of Mindoro on 9 December.

On 11 December, S-38 mistakenly torpedoed and sank Norwegian freighter Hydra II west of Mindoro's Cape Calavite.

The following night, she put into Camens Cove; repaired damage caused by an explosion of pressure built up in the port engine lube oil cooler; and, with dawn on 21 December, resumed her patrol.

At 09:30, she grounded on the muddy bottom; she remained there most of the day,[9] destroyers, joined by small boats, continuing to search, without success.

During the maneuvering, her port propeller was damaged; but, by 22:01, she was free and underway for the Hundred Islands area on the western side of the gulf.

S-38 surfaced to change the air and charge batteries, then dove at dawn, remaining on the bottom all the next day, giving her crew a rest.

Cavite had now become untenable, and S-38 was ordered to Soerabaja and after repairs S-38 was to operate with other Allied forces attempting to stem the Japanese thrust into the East Indies.

On 7 February, she penetrated close to Balikpapan to examine shipping in the harbor, activity along the coast road, and new defenses in the area.

On 28 February, she picked up 58[11] survivors from destroyer HMS Electra, sunk the day before at the Battle of the Java Sea; and, on 1 March, transferred the British sailors to a surface ship in Madoera Strait.

She then resumed her hunt for Japanese shipping which had put the enemy ashore at Batavia, Indramajoe, and Rembang, the latter the last large oil center in the Netherlands East Indies and only 110 mi (180 km) from Soerabaja.

On 13 March she arrived at Fremantle; and, at the end of the month, proceeded to Brisbane to join other Asiatic Fleet S-boats in forming the nucleus of TF 42 and to prepare for operations in the New Guinea-Bismarck Archipelago-Solomon Islands area.

During March and April, enemy air raids against Port Moresby intensified in preparation to move into Papua from northeast New Guinea.

On 20 May, she passed debris believed to be a result of the Battle of the Coral Sea, and that night she successfully transmitted a message to Brisbane.

A month-long repair and test period followed during which cells damaged in the battery explosion on her first war patrol were finally replaced.

On 24 June, she again stood down the Brisbane River, cleared Moreton Bay, and entered the Coral Sea bound for the Solomons.

The leaks in the latter worsened as she moved out of the immediate area and resulted in a stream of air bubbles which led to aerial detection two hours after she had left the destroyer behind.

For the better part of the next 20 days, S-38 underwent intensive, round-the-clock repairs at the Queensland Government Dry Dock, and, on 28 July, she again headed out across the Coral Sea.

On 4 August, she entered her assigned area, New Britain-New Ireland, and commenced patrolling along the Rabaul-New Guinea traffic lanes.

On 7 August, she shifted her search for Japanese shipping further seaward and within hours sighted several targets; but distance, lack of speed and maneuverability, and mechanical breakdowns precluded successful attacks.

On 8 August, however, approximately eight miles south of Cape St. George, she sighted a transport escorted by a destroyer and approaching so as to pass close ahead.

Fleet submarines were now ranging the Pacific, and the S-boats were being ordered back to the United States for modernization overhauls.

On 30 September, she altered her course and headed for Anuda in the Santa Cruz Islands where she transferred an acute appendicitis case to a Navy PBY Catalina on 1 October; then resumed her original mission.

By midnight, the submarine was patrolling the Makin-Tarawa traffic lane, and, on 10 October, she completed her reconnaissance mission at Makin and headed for Pearl Harbor.

At 10:17 on 16 August 1944, a U.S. Navy TBM Avenger torpedo bomber from the escort carrier USS White Plains (CVE-66) mistook S-38 for a Japanese submarine about 12 nautical miles (22 km; 14 mi) ahead of the White Plains task unit while S-38 was conducting antisubmarine warfare exercises near Espiritu Santo with two SBD Dauntless dive bombers and the yard patrol boat USS YP-414.

S-38 was decommissioned on 14 December 1944, struck from the Naval Vessel Register on 20 January 1945, and expended as a target by aerial bombing on 20 February 1945.

The S-38 is the subject of an episode of the syndicated television anthology series, The Silent Service, which aired in the United States during the 1957–1958 season.