On 20 January 1862, the Gulf Blockading Squadron was divided in two to create the West Gulf Blockading Squadron and the East Gulf Blockading Squadron. "Water Witch" was assigned to the latter organization, and her area of operations became the gulf coasts of Alabama and Florida. She served most frequently off Mobile, Alabama and Pensacola, but also performed the familiar duty of dispatch vessel and mail packet. On 5 March 1862, the gunboat pursued the Confederate schooner, "William Mallory", for five hours before finally capturing the blockade runner late in the day. In April, she began another period of repairs that lasted until September. On 6 September, she was recommissioned and ordered to join Rear Admiral Samuel F. du Pont's South Atlantic Blockading Squadron. She arrived at Port Royal, South Carolina, on 18 September and, by the end of the month, was on blockade station in the St. Johns River in northeastern Florida.