The Hood was part of the Mediterranean Fleet from July 1936. From June 1939, the Hood was part of the Home Fleet's battle fleet in Scapa Flow. When war broke out later that year, it patrolled mainly around Iceland and the Faroe Islands to protect convoys and intercept German auxiliary cruisers trying to break through to the Atlantic. In September 1939, the Hood was hit by a 250-kg aerial bomb which, however, caused little damage. As the flagship of Force H, it participated in Operation Catapult in July 1940, taking out the French fleet. In August, the Hood was reassigned to the battle fleet and resumed patrols against German auxiliary cruisers. From 13 January to 18 March 1941, modernisation took place at Rosyth. Even after that, the ship was in poor condition. The threat from the large German warships was so severe that longer yard maintenance was out of the question and, moreover, the King George V-class battleships were not all operational yet.

When the Bismarck sailed in May that year, the Hood departed under the command of Admiral Holland. Together with the new Prince of Wales, the ship was to prevent German ships from breaking out into the Atlantic and attacking Allied convoys. On 24 May, Holland's ships intercepted the Bismarck and the heavy cruiser Prinz Eugen, in the Denmark Strait.

The Battle of the Denmark Straits on 24 May 1941 ended fatally for the Hood. The Hood first attacked the Prinz Eugen instead of the Bismarck. When the German ships discovered the Hood's position, the ship was hit by an 8-inch (204 mm) shell from the Prinz Eugen, which exploded on the sloop deck. This resulted in the 4-inch (102 mm) ammunition and unguided UP missiles catching fire. This caused a fire that would prove fatal to the battlecruiser.