Lowry commanded the army transport steamship "George Peabody", landing troops during the Battle of Hatteras Inlet Batteries in August 1861. He then commanded the gunboat from October 1861 until February 1862, and as part of the North Atlantic Blockading Squadron, took part in operations off North Carolina, in November sinking three blockships at the entrance to Ocracoke Inlet, and then in February 1862 capturing enemy fortifications on Roanoke Island, and then taking part in the subsequent capture of Elizabeth City.