Late in the afternoon of 15 July 1942, as Unicoi steamed southward off Cape Lookout, North Carolina, with convoy King Sail 520 (KS 520),[3] a German submarine struck without warning and torpedoed three merchant vessels of the formation.

The ship's alert armed guard quickly took advantage of this unusual opportunity and fired a shell, scoring a hit on the submarine.

Designated an unclassified miscellaneous auxiliary ship (IX), she reported for duty with Service Squadron 8, Service Forces, Pacific; but, due to her age and disrepair, underwent extensive overhaul at Seeadler Harbor before taking up her duties as a mobile dry storage ship early in August, shortly before Japan capitulated.

After unloading her cargo, shifting ballast and discharging 65 tons of fresh water over the side, she was refloated with the assistance of two landing craft late in the afternoon.

Unicoi arrived at San Francisco on 2 February 1946, was decommissioned on 16 April, and returned on the same day to the War Shipping Administration at Suisun Bay, California.