In 1913, a 250 ton crane was installed, and the shipbuilding facilities expanded to permit the construction of large warships. With the mothballing of the Maizuru Naval Arsenal due to restrictions by the Washington Naval Treaty, much of the design and prototype work for new classes of destroyers and torpedo boats formerly done at Maizuru was shifted to Sasebo. The facilities at Sasebo were also used for the conversion of the Akagi and Kaga from battleships to aircraft carriers.
The Imperial Japanese Navy employed some 50,000 people at the Sasebo Naval Arsenal at the peak of World War II, constructing and refitting destroyers, light cruisers, submarines and other various naval vessels. The 21st Naval Air Arsenal, established jointly at Sasebo and Omura, produced a total of 966 aircraft. The facilities at Sasebo were used for repairs on the battleships Yamato and Musashi during the Pacific War.
After the surrender of Japan, On September 22, 1945, the 5th Marine Division landed at Sasebo, and in June 1946, United States Fleet Activities Sasebo was formally established on a portion of the former Sasebo Naval Arsenal. The remaining portion of the shipyards was given into civilian hands with the establishment of Sasebo Heavy Industries Co., Ltd. in 1946. Sasebo Heavy Industries is one of Japan's few remaining active shipbuilders.