On 31 Oct 1936, USS Erie (PG 50) sailed from New York for her shakedown cruise and had temporary duty with Squadron 40-T, which was organized to protect Americans and their interests during the Spanish Civil War. She visited some European ports and evacuated refugees from the northern coast of Spain to San Juan de Luz. The vessel returned via Azores to New York, arriving on 30 Dec 1936.
From 1938 to 1941 the gunboat was flagship of the Special Service Squadron, operating along the coasts of Central and South America, training with submarines, conducting exercises and later on Neutrality Patrol and serving as guard ship for the Panama Canal. Early 1942, USS Erie (PG 50) was based at Balboa, patrolling regularly along the Central American coast and to the Galapagos Islands.

On 9 June, she arrived at Cristobal, her new base and on 11 June, operating from there picked up 45 survivors of Fort Good Hope, which had been torpedoed by U-159 (Witte) the same day. On 16 June, she picked up 25 survivors from a lifeboat of the Lebore, which was sunk by U-172 (Emmermann) two days before, and 28 more from St. Andrews Island. Later the ship escorted convoys to Yucatan Channel and Guantanamo Bay and on 28 September cleared Coco Solo to guard the passage of a convoy to Trinidad.

On 10 Nov 1942, USS Erie (PG 50) (Capt A.R. Mack) left Port of Spain, Trinidad escorting convoy TAG-20 to Guantanamo Bay. At 22.00 hours on 12 Nov 1942, U-163 reported a hit on a Somers-class destroyer, but this was USS Erie (PG 50) which caught fire, worsened by the rupture of tanks of oil and gasoline. The charges for her 6in guns exploded and the crew was ordered to abandon ship because the fires got out of control after she was beached northwest of Willemstad, Curaçao. Seven men were killed and eleven wounded. The survivors were picked up by HNMS Van Kinsbergen.

Four days later, firefighters with advanced equipment boarded USS Erie (PG 50) and the next day they were augmented by specialists brought down from Norfolk. The fires were extinguished and the gunboat was towed into the harbour of Willemstad for repairs. Before they could be completed, she began to take a starboard list and when counterflooded, capsized to port, sinking on 5 Dec 1942 and was declared a total loss. Struck from the Naval Register on 28 July 1943.