Chartered to search for the Confederate States Navyraider CSS Sumter, Keystone State shared in the capture of Hiawatha at Hampton Roads on 10 May 1861. When her charter expired on 23 May, she returned to Philadelphia, where she was purchased for $125,000 from Alexander Heron Jr., fitted out, and commissioned. She left the Delaware Capes on 21 July and cruised in the West Indies seeking Confederate blockade runners in Caribbean ports. On the high seas, she captured Saloon on 10 October and towed her to Philadelphia via Key West, Florida.
At Philadelphia, Commander William E. Le Roy took command of the ship on 12 November. The sidewheeler stood down the Delaware River and out to sea on 8 December, visited Bermuda, and arrived at Hampton Roads on 26 December 1861. She got underway on 9 January 1862, and joined the South Atlantic Blockading Squadron at Charleston, South Carolina on 13 January. Ordered to the Florida coast, she engaged Confederate batteries at Amelia Island on 18 January and captured schoonerMars on 5 February. Keystone State arrived at Port Royal, South Carolina for refit and replenishment on 18 March, getting underway again on 29 March. She chased a blockade runner and fired at another on 3 April, but both escaped. On 10 April, she chased schooner Liverpool of Nassau ashore where she was burned to the water's edge. Schooner Dixie fell prey to the vigilant blockader on 15 April, steamer Elizabeth then struck her colors on 29 May, and schooner Cora surrendered two days later. Keystone State took blockade runner Sarah off Charleston on 20 June and pursued an unidentified steamer all day and night of 24 June before giving up the chase. She took schooner Fanny attempting to slip into Charleston with a cargo of salt on 22 August. However, this was dangerous work, and Keystone State well earned her long list of prizes. On 31 January 1863, she discovered a ship off Charleston, stood fast, and fired at her. The ship responded in kind, from time to time hitting the blockader. At 06:00, a shot ripped into Keystone States steam drum, scalding an officer and nineteen men to death and wounding another twenty. Later that morning, towed Keystone State to Port Royal for repairs. Ready for action again, she got underway on George Washington's Birthday for blockading station off St. Simons Sound, Georgia, where she served until departing for Philadelphia on 2 June for repairs at the navy yard, where she decommissioned on 10 June.
Keystone State recommissioned on 3 October, Cdr. Edward Donaldson in command, and stood out from Delaware Capes on 27 October. Three days later she joined the North Atlantic Blockading Squadron at Wilmington, North Carolina. While cruising off Wilmington, the veteran side wheeler captured the steamer Margaret and Jessie on 5 November. On 29 May 1864, she picked up 235 bales of cotton which had been thrown overboard by a chase; and the next day she captured steamer Caledonia. She took steamer Suez off Beaufort, North Carolina on 5 June and steamer Rouenat sea 2 July. On 26 July, she chased a steamer which escaped after throwing her cargo of cotton overboard. Keystone State then picked up over 60 bales. On a similar occasion on 8 August, she salvaged 225 bales. On 24 August, she chased and captured steamer Lilian and, with, in fact the Margaret and Jessie that the Keystone State had captured, picked up 58 bales. On 5 September, with, she chased and fired at steamer Elsie. A shell exploded in the blockade runner's forward hold, starting a fire which Keystone State extinguished. Keystone State then escorted her prize to Beaufort, North Carolina.
During the fall of 1864, the sidewheeler continued blockade duty off the North Carolina coast; and, as winter set in, she prepared to attack Fort Fisher, which protected the important Confederate port of Wilmington. Shortly after dawn on Christmas Eve, Keystone State, steaming with the reserve squadron of the fleet in line of battle, got under way toward Fort Fisher. Her guns, firing over and between the ships in the first echelon, supported troops as they landed and fought to take the fort. However, late in the afternoon, the Union Army commander, GeneralBenjamin Franklin Butler, decided that the Confederate works could not be taken and ordered his troops to reembark. Keystone State withdrew to Beaufort.
, the Union Navy commander, was not to be thwarted. He renewed the attack on Fort Fisher on 13 January 1865 with a force of 59 warships. He sent some 2,000 sailors and marines ashore to aid the 8,000 Army troops led by Major General Alfred H. Terry. After three days of bitter fighting, the bravely defended Confederate fortress fell, closing the South's last supply line with Europe. Keystone State reached the scene before dawn on 16 January and received the wounded.
After the capture of Wilmington, the sidewheeler continued to operate along the Carolina coast supporting clean-up operations which snuffed out Southern resistance. She got underway on 13 March towing monitor to Hampton Roads, and arrived at Baltimore, Maryland on 20 March. Keystone State decommissioned on 25 March and was sold at auction at Washington, D.C. on 15 September to M. O. Roberts. She was redocumented as SS San Francisco on 22 December, and operated in merchant service until 1879.
