After commissioning, the USS Stars and Stripes was assigned to the North Atlantic Blockading Squadron and arrived at Hampton Roads 26 September 1861. Two days later it towed schooners of the Great Stone Fleet to Hatteras Inlet. It arrived October 1 and then operated in the that vicinity for the next several months.
During that time, Lt. Reed Werden was also in charge of the USS Ceres, General Putnam and Underwriter. Because of the drafts of the Stats and Stripes and the Underwriter, Werden refused to allow these two ships to enter shallow Pamlico Sound.
On 2 November, the Stars and Stripes fought a Confederate gunboat, but neither ship was within each other's range so no damage done.
On November 5 and 6, 1861, the ships under Werden's command attempted to provide assistance to the French corvette Prony, which had run aground, but weather and Confederate activity prevented them from doing so and the ship was lost.
On 15 December, the Stars and Stripes captured the schooner Charity and sent it to New York City for adjudication.