While "I-7" was at Yokosuka, the Aleutian Islands campaign began on 3–4 June 1942 with a Japanese air raid on Dutch Harbor, Alaska, followed quickly by the unopposed Japanese occupation in the Aleutian Islands of Attu on 5 June and Kiska on 7 June 1942. On 10 June 1942, "I-1", "I-2", "I-3", "I-4", "I-5", "I-6", and "I-7" were reassigned to the Northern Force for duty in the Aleutians, and on 11 June 1942 "I-7" set out for Aleutian waters to begin her third war patrol. She joined the "K" patrol line and patrolled off Unalaska Island. She was in the Gulf of Alaska on 14 July 1942 when she torpedoed the 2,722-ton United States Army Transport , which was on a voyage from Bethel, Alaska, to Seattle, Washington. She then attacked "Arcata" with gunfire, her gun crew finding accuracy difficult in the choppy seas. After one of "I-7"′s shells hit "Arcata"′s bridge, her passengers and crew abandoned ship. Seven members of "Arcata"′s crew were killed. Japanese records claim "I-7" ceased fire when she spotted life rafts in the water, while "Arcata"′s survivors reported that "I-7" machine-gunned the life rafts, killing one crewman. "Arcata" sank at .