On 12 May 1939, following a yard overhaul, "Squalus" began a series of test dives off Portsmouth, New Hampshire. After successfully completing 18 dives, she went down again off the Isles of Shoals on the morning of 23 May at . Failure of the main induction valve (the means of letting in fresh air when on the surface) caused the flooding of the aft torpedo room, both engine rooms, and the crew's quarters, drowning 26 men immediately. Quick action by the crew prevented the other compartments from flooding. "Squalus" bottomed in of water.