Sunk after being attacked and depth charged by ships from the German 1st Minesweeping Flotilla on 7 January 1940 about 15 nautical miles north-west of Helgoland in position 54º19'N, 07º30'E.

It is however also possible that she was rammed and sunk by the German Sperrbrecher IV/Oakland south east of Helgoland on 29 December 1939.

HMS Seahorse was never heard from after sailing from Blyth on 26 December 1939 for patrol off western Jutland. Her operational area was to be initially off Helgoland then move to the mouth of the Elbe on 30 December and return to Blyth on 9 January 1940.
A report by the German 1st M-Flotille states that a submarine was sighted at 1318 hrs of 7 January 1940, the boat dived, was located and depth charges were dropped at the location. Submarine noises were picked up on the hydroacustic listening devices, the echolocator indicated a clear echo and more depth charges were dropped. Fog prevented any sort of visual contact with possible debris being established.
The fact that the report mentions a visual contact & that no boat returning from patrol reported this attack leaves only HMS Seahorse as the target of the attack. The lack of evidence of a "kill" may just be attributed to the attack causing sufficient damage to prevent the boat from resurfacing but not wrecking the hull to the point of causing any parts thereof to surface.

Commanding Officer:
Lt. Dennis Staunton Massy-Dawson, RN
15 April 1939 - 7 January 1940