Stonewall Jacksons conversion was completed on 16 March 1862. Under Capt. G. M. Phillips she was detached from Montgomery's main force and sent to Forts Jackson and St. Philip on the lower Mississippi to cooperate in the Confederate defense of New Orleans. There, with five other vessels of Montgomery's fleet, all under Capt. J. A. Stevenson, she joined the force under Capt. J. K. Mitchell, CSN, commanding Confederate naval forces in the lower Mississippi.
On 24 April 1862 a Union fleet under Flag Officer David Farragut, USN, ran past Forts Jackson and St. Philip on its way to capture New Orleans. In the engagement Stonewall Jackson rammed, which had already been struck by . With Varunas shot glancing off her bow, Stonewall Jackson backed off for another blow and struck again in the same place, crushing Varunas side. The shock of the blow turned the Confederate vessel, and she received five 8-inch shells from Varuna, abaft her armor. Varuna ran aground in a sinking condition, and Stonewall Jackson, chased by coming to Varunas rescue, was driven ashore and burned.