Valkyrie III had a steel frame, a hull planked with American elm and teak, and a pine deck.

[2] After a few mixed test races (for which she was later criticized for lack of previous competition) she sailed to New York to prepare for the ninth America's Cup.

Valkyrie III fouled the leeward Defender during the prestart to the second race, breaking her starboard shrouds, but the latter did not protest and the race took place nevertheless, with Valkyrie III finishing ahead of Defender on corrected time.

In turn the America's Cup committee ruled to disqualify the Valkyrie III because of the foul and dismissed Lord Dunraven's counter-proposal to re-race.

Lord Dunraven claimed the Americans had cheated, creating a public controversy that jeopardized the future challenges for the America's Cup race until Sir Thomas Lipton issued his own Shamrock challenge in 1898.