Nichols was promoted to commander on July 16, 1862. In 1863 he commanded of the steamer USS "Alabama" in the West India Blockading Squadron. The following year he was in command of the steamer USS "Mendota" of the North Atlantic Blockading Squadron and retained that command until 1866 when he was assigned special duty in New York City. With the USS "Mendota", Nichols saw heavy action when he engaged a rebel battery at Four Mile Creek on the James River, June 16, 1864. The "Mendota" was again engaged at the First Battle of Deep Bottom, being the only Navy vessel in support.