Jaydee III was built in 1916 as a private motorboat of the same name by the Matthews Boat Company at Port Clinton, Ohio. On 19 May 1917 or in June 1917, the U.S. Navy acquired her from her owners - R. Talbot, J. C. Wright, Howard Wilson, and Irving Chapin, of Lincoln, Nebraska - for use as a section patrol vessel during World War I. She was commissioned as USS Jaydee III (SP-692) at Detroit, Michigan, on 12 June 1917.
Assigned to the 9th, 10th, and 11th Naval Districts - at the time a single administration entity created by the amalgamation of the 9th Naval District, 10th Naval District, and 11th Naval District - and based at Detroit, Jaydee III served as a patrol craft and shipping traffic regulator on the Detroit River for the rest of World War I.
Jaydee III was returned to her owners on 7 March 1919.