At 22.16 hours on 1 March 1944 the Saint Louis was hit on the starboard side in #2 hold and the engine room by two G7a torpedoes from U-66 while steaming on a non-evasive course at 8 knots about 10 miles south of Accra, Gold Coast. She immediately broke up in three parts with the middle part listing to starboard and sinking first, lifting both ends until all parts had disappeared in less than 50 seconds. The master, 23 crew members, five gunners (the ship was armed with two 75mm, four 20mm and eight machine guns), 41 Kroomen and 15 African passengers (one man, two women and twelve children) were lost. The ship was escorted on her starboard beam by the British motor launch HMS ML-1041 (SubLt B.M. Wallace, RNZVR), which spotted the U-boat on the surface only after the attack. It took the crew of the motor launch about three minutes to get on action stations, but then turned hard to port and increased speed to emergency speed of 11.5 knots, steering head-on towards the U-boat. The 3pdr gun on the forecastle opened fire at 1800 yards, but the shots were high due to the impracticable mounting of the gun and the commander had to cease fire after six rounds were fired because the flash blinded the men on the bridge. They could not see the U-boat anymore and prepared to drop three depth charges, assuming that it had crash dived after picking up an Asdic contact. However, cries were heard from survivors and wreckage and rafts observed right ahead after the first depth charge was dropped, so the other depth charges were not dropped and the motor launch weaved its way through the wreckage, hitting something with the port screw. The survivors later reported that U-66 was passing slowly through the large field of debris at that time and escaped at full speed on the surface when taken under fire.

At about 22.45 hours, HMS ML-1041 began to pick up the survivors after her Asdic broke down. 16 crew members, three gunners, 29 Kroomen and one male passenger were rescued within one hour, no one being seriously injured. A dinghy with oars, sail and water was left behind in case they missed someone in the darkness. In the meantime, the Asdic was working again and the motor launch carried out an anti-submarine sweep to seaward, dropping three depth charges and then set course for Accra to pass the message of the sinking of Saint Louis to HMS ML-1018 (SubLt L. Walton, RNVR) lying at anchor there, because their wireless could not be used due to empty batteries. HMS ML-1041 returned to Takoradi at 10.5 knots after passing the message, arriving there at 14.30 hours on 2 March. HMS ML-1018 was unable to pass the message to Takoradi because it was out of range for their wireless set and the motor launch first proceeded to the area of the sinking to search for the attacker and survivors before getting the message through when she returned to Accra, more than 12 hours after the attack had taken place.

The incident was thoughtfully investigated by a board of enquiry of the Admiralty that revealed several shortcomings in the organization, maintenance and training of the coastal forces in the area. The main generators of HMS ML-1041 were out of order for many months because no spare parts were available and the auxiliary dynamo was no longer charging after the last carried out assignment. Her commander reported this verbally to the commanding officer of the base and that he had to charge his batteries from other motor launches lying alongside. Nevertheless, he was ordered to escort Saint Louis despite reminding his superiors of the technical problems his motor launch had. Only a few hours after leaving port the wireless set was no longer working as there was not enough energy and the state of the batteries was so low at the time of the attack that the alarm buzzers were not making sufficient noise to alert the crew. The naval officer in charge at Takoradi was reprimanded for the inadequate escort of the ship lost because he knew that U-boats were operating in the area and a single motor launch, even if perfectly equipped, was no match for a U-boat on the surface as they were almost twice as fast and much better armed. The commander of the motor launch was criticized for the lack of attention and energy in regard to the fighting organization of his ship, but also praised for his spirit of attack. Generally, the board found the situation with the spare parts for the motor launches appalling and also judged that they were inadequately equipped for escort duty with obsolete 3pdr guns and wireless sets that had not enough range.