Assigned to the Navy Yard, Guantanamo Bay, Cuba, Montcalm departed New York on 2 March 1921, steaming via Norfolk, and arriving at Guantanamo on the 14th. The tug operated out of the Cuban base through 1923, making periodic voyages to Key West, Norfolk and ports in the Bahamas until sailing for Charleston, South Carolina, on 24 April 1923. Arriving on 1 May, Montcalm was repaired and served locally and at Philadelphia before returning to Guantanamo Bay on 19 June 1924. Annual voyages to Charleston for repairs and service missions to New York in late 1929 and 1931 alternated with active service in the Caribbean. Montcalm arrived at Philadelphia on 25 May 1932 and decommissioned there on 30 June.
Recommissioned on 13 August 1935, she left Philadelphia on 14 September for her new base, Port Pensacola, Florida. She operated on numerous voyages along the Gulf and east coasts, as far west as Galveston, Texas, and as far north as Norfolk. While stationed at Pensacola, the ship acted as plane guard for seaplane training, salvage ship, and naval aviation cadet training ship, in addition to performing her regular towing duties.
On 10 July 1939, the tugboat was reassigned to the Guantanamo Naval Station and for the remainder of her active career operated out of the Cuban base towing targets, and on salvage and towing missions throughout the Caribbean and to ports in the Southern United States. During World War II she continued her vital services in the Gulf of Mexico and the Caribbean. She was reclassified ATO‑39 on 15 May 1944.
Following the end of the war, the tug decommissioned at Charleston Navy Yard on 24 May 1946, was struck from the Naval Vessel Register on 13 June 1946, and was sold to J. C. Berkwit & Co., New York City, on 12 February 1947.