Ten days later Captain John P. Gillis took command of the ship and she got underway for Hampton Roads to join the North Atlantic Blockading Squadron in which she served until departing Newport News, Virginia, 18 May 1863 to join the West Gulf Blockading Squadron off Mobile, Alabama. She captured schooner Helena there 30 June and with USS Kennebec seized steamers James Battle and William Bagley in the Gulf of Mexico on 18 July. The former, "the finest packet on the Alabama River...altered to suit her for a blockade runner," was laden with cotton and rosin while the latter carried cotton which they hoped to sell abroad.
In September Ossipee steamed to the coast of Texas for blockade duty until returning to station off Mobile in mid-March 1864 as Admiral David Farragut built up his forces for the invasion of Mobile Bay. On 5 August, with USS Itasca alongside, she passed the forts and entered Mobile Bay with Farragut and participated in the ensuing naval battle, playing a large role in the struggle with CSS Tennessee which finally forced the well fought, heavy southern ironclad ram to surrender.
In September Ossipee returned to blockade duty off the Texas coast and, but for repairs at Pensacola, Florida late in 1864, served there until moving to New Orleans, Louisiana in April 1865. She was one of the Federal ships to pursue CSS Webb during the Confederate steamer’s daring attempt to race down the Mississippi River and escape to sea.
Following duty off Mobile, Ossipee sailed North late in June and decommissioned at Philadelphia, Pennsylvania on 3 July.  Trimmed a bit as seen.