Late in the war, General Lyon was chartered by the US Army for a passage from North Carolina to Norfolk, Virginia. On board were a large number of discharged Union soldiers returning from the war, along with a number of Confederate prisoners of war, sixty refugees and some other passengers.
On March 17 1865, two days into the voyage, the ship hit rough weather off Cape Hatteras and a fire broke out in the engine room, quickly spreading through the ship. Of the passengers on board, approximately 600 lost their lives, including all but three members of a 205-man contingent of the US 56th Illinois Volunteer Infantry Regiment. There were only 28 survivors of the disaster in total.
A few days later, United States President Abraham Lincoln was assassinated and General Robert E. Lee of the Confederacy surrendered to U.S. General Ulysses S. Grant, ending the long and bloody civil war. As a result, the General Lyon disaster was overshadowed by larger historical events, and an investigation into the cause of the tragedy was never carried out.