Transiting the Panama Canal on 1 April 1940, a month before the situation in Europe became critical when Germany began her blitzkrieg against France and the Low Countries, Thatcher subsequently conducted neutrality patrols and training cruises off the east coast and in the Gulf of Mexico through the summer of 1940.

British destroyer forces in the wake of the Norwegian campaign and the evacuation of Dunkirk found themselves thinly spread—especially after Italy entered the war on Germany's side.

In response, Franklin D. Roosevelt issued an executive order authorizing the transfer of 50 over-aged destroyers to the British in return for 99-year leases on strategic base sites in the Western Hemisphere.

Thatcher was accordingly withdrawn from the Atlantic Squadron and her operations with Destroyer Division 69 for transfer to the Royal Canadian Navy, which had been allocated six of the "50 ships that saved the world," as these vessels came to be known.

In March the destroyer rescued the survivors from the US merchantman SS Independence Hall, which had run aground off Sable Island, Nova Scotia, and had broken in half.

The next month, she picked up two boatloads of survivors from the sunken steamer SS Rio Blanco, which had been torpedoed by U-160 on 1 April 1942, 40 nautical miles (74 km) east of Cape Hatteras, North Carolina.

The destroyer subsequently underwent boiler repairs at Pictou, Nova Scotia from May to August 1942 before resuming coastwise convoy operations between Halifax and New York and escort duty in the western Atlantic.

Niagara became a torpedo-firing ship — first at Halifax and later at Saint John, New Brunswick — from the spring of 1945 until the end of World War II in mid-August 1945, training torpedomen.