Built by Ramage & Ferguson, Otter was launched on 19 July 1884. Originally designed as a tug, during its construction, the ship was purchased by the Queensland Maritime Defence Force and was converted for military service. She was fitted with a single 5-inch gun, allowing her to operate as an auxiliary. Displacing 220 tons, she was capable of . A 64-pounder gun later replaced her 5–inch gun.
Following the Jervois-Scratchley reports the colonial governments of Australia restructured their defence forces. This process led to the formation of the Queensland Maritime Defence Force. To equip the new force the colonial government initially ordered two gunboats and a torpedo boat. As an interim measure as well as to supplement the purpose–built warships it was decided that other ships already under construction be modified for military use. Otter was one of the ships chosen and in military service she performed tender duties and conducted patrols. Following Federation she was transferred to the Commonwealth but served only until 1906 when she was paid off.
During World War I, the Royal Australian Navy (RAN) requisitioned Otter from her civilian owner and used her as an examination vessel. Following the conclusion of hostilities, the RAN returned her to her previous owner. In World War II, Otter again served as an examination vessel but only until December 1940. Otter was returned to private operations on Moreton Bay, and was scrapped in 1946.