Her commercial service ended on 15 January 1862 when Confederate Major General Mansfield Lovell seized her at New Orleans along with 13 other steamers for use as a blockade runner. No continuous record of her operations during the next year is extant, but sporadic reports suggest that the ship carried cotton from New Orleans and Mobile to Havana and returned to those ports with war materiel.
Gaps exist in our knowledge of changes in the vessel's owners, name, and registry.
That morning, a lookout on Montgomery's topmast head sighted the blockade runner. The Union screw gunboat immediately set out in pursuit of the stranger, beginning a six-hour chase. When Montgomery pulled within range of Caroline, she opened fire with her 30-pounder Parrott rifle and expended 17 shells before two hits brought the quarry to. Two boats from the blockader rowed out to the former Arizona and one returned with her master, a man named Forbes, who claimed to have been bound for Matamoros, Mexico, not Mobile. Any man bound for Matamoros from Havana and coming within twelve miles of Mobile light has no business to have a steamer.