As Atlanta

The brothers Asa and Nelson Tift received the contract to convert the blockade runner into an ironclad in early 1862 with the name of Atlanta, after the city in Georgia. This was largely financed by contributions from the women of Savannah. Fingal was cut down to her main deck and large wooden sponsons were built out from the sides of her hull to support her casemate. After the conversion, Atlanta was 204 feet (62.2 m) long overall and had a beam of 41 feet (12 m). Her depth of hold was now 17 feet (5.2 m) and she now had a draft of 15 feet 9 inches (4.8 m). Atlanta now displaced 1,006 long tons (1,022 t) and her speed was estimated at 7–10 knots (13–19 km/h; 8.1–11.5 mph).

The armor of the casemate was angled at 30° from the horizontal and made from two layers of railroad rails, rolled into plates 2 inches (51 mm) thick and 7 inches (180 mm) wide. The outer layer ran vertically and the inner layer horizontally. Her armor was backed by 3 inches (76 mm) of oak, vertically oriented, and two layers of 7.5 inches (191 mm) of pine, alternating in direction. The bottom of the casemate was some 20 inches (508 mm) from the waterline and its top was 8 feet 6 inches (2.59 m) above the waterline. The pyramidal pilothouse was armored in the same way and had room for two men. The upper portion of Atlanta's hull received 2 inches (51 mm) of armor.

The rectangular casemate was pierced with eight narrow gun ports, one each at the bow and stern and three along each side. Each gun port was protected by an armored shutter made of two layers of iron riveted together and allowed the guns to elevate only to a maximum of +5 to +7°. Atlanta was armed with single-banded, 7-inch (178 mm) Brooke rifles on pivot mounts at the bow and stern. The middle gun port on each side was occupied by a single-banded, 6.4-inch (163 mm) Brooke rifle. The 17-caliber, seven-inch guns weighed about 15,000 pounds (6,800 kg) and fired 80-pound (36 kg) armor-piercing "bolts" and 110-pound (50 kg) explosive shells. The equivalent statistics for the 18.5-caliber, 6.4-inch gun were 9,110 pounds (4,130 kg) with 80-pound bolts and 64-pound (29 kg) shells. Atlanta was also armed with a 20-foot (6.1 m), solid iron, ram that was reinforced by a series of vertical steel bars. In front of the ram was a spar torpedo that carried 50 pounds (23 kg) of black powder on a wooden pole connected to an iron lever that could be raised or lowered by means of pulleys.

On 31 July 1862, under the command of Lieutenant Charles H. McBlair, Atlanta conducted her sea trials down the Savannah River toward Fort Pulaski. The ship proved to be difficult to steer, and the additional weight of her armor and guns significantly reduced her speed and increased her draft. This latter was a real problem in the shallow waters near Savannah. She also leaked significantly, and her design virtually eliminated air circulation. One report said that "it was almost intolerable on board the Atlanta, there being no method of ventilation, and the heat was intense." Scales commented in his diary, "What a comfortless, infernal and God-forsaken ship!!"

Attempts were made to fix the problems and were at least partially successful in stopping many of the leaks. The ship was commissioned on 22 November and became the flagship of Flag Officer Josiah Tattnall III, commander of the naval defenses of Georgia. Under pressure from Mallory to engage the blockading ships, Tattnall attempted to engage them before any ironclads arrived on 5 January 1863, but army engineers could not clear the obstacles blocking the channel in a timely manner, despite early coordination being made by Tattnall to do so. It took another month to actually clear the obstacles and two monitors arrived before the end of January. Nonetheless, Tattnall attempted to pass through the obstructions during high tide on 3 February, but high winds prevented the water from rising enough to allow the ship to do so. After Atlanta successfully passed through them on 19 March, Tattnall planned to attack the Union base at Port Royal, South Carolina while the monitors were attacking Charleston. Deserters revealed Tatnall's plan while he was waiting at the head of Wassaw Sound and he was forced to retreat when three monitors augmented the defenses at Port Royal. Dissatisfied with Tattnall's perceived lack of aggressiveness, Mallory replaced Tattnall as commander of the Savannah squadron later that month with Commander Richard L. Page. Page, in his turn, was relieved in May by Commander William A. Webb; Atlanta remained the squadron flagship throughout this time.

Webb demonstrated his aggressiveness when he attempted to sortie on the first spring tide (30 May) after taking command, but Atlanta's forward engine broke down after he had passed the obstructions, and the ship ran aground. She was not damaged although it took over a day to pull her free. He planned to make another attempt on the next full tide, rejecting Mallory's idea that he wait until the nearly complete ironclad Savannah was finished before his next sortie. In the meantime, Rear Admiral Samuel F. Du Pont, commander of the South Atlantic Blockading Squadron, had ordered the monitors Weehawken and Nahant into Wassaw Sound. Commander John Rodgers in Weehawken had overall command of the two ships.

In the early evening of 15 June, Webb began his next attempt by passing over the lower obstructions in the Wilmington River and spent the rest of the night coaling. He moved forward the next evening to a concealed position within easy reach of the monitors for an attack early the following morning. Webb planned to sink one of the monitors with his spar torpedo and then deal with the other one with his guns. The gunboat Isondiga and the tugboat Resolute were to accompany him to tow one or both of the monitors back to Savannah.

A lookout aboard Weehawken spotted Atlanta at 04:10 on the morning of 17 June. When the latter ship closed to within about 1.5 miles (2.4 km) of the two Union ships, she fired one round from her bow gun that passed over Weehawken and landed near Nahant. Shortly afterward, Atlanta ran aground on a sandbar; she was briefly able to free herself, but the pressure of the tide pushed her back onto the sandbar. This time Webb was unable to get off and the monitors closed the range. When Weehawken, the leading ship, closed to within 200–300 yards (180–270 m) she opened fire with both of her guns. The 11-inch (279 mm) shell missed, but the 15-inch (381 mm) shell struck the ironclad above the port middle gun port, penetrated her armor, and broke the wooden backing behind it, spraying splinters and fragments that disabled the entire gun crew and half the crew of the bow gun, even though it failed to cleanly penetrate through the backing. The next shot from the 11-inch Dahlgren gun struck the upper hull and started a small leak even though it failed to penetrate the two-inch armor there. The next shell from the 15-inch Dahlgren glanced off the middle starboard gun shutter as it was being opened, wounding half the gun's crew with fragments. The final shell was also from the 15-inch Dahlgren and it struck the top of the pilothouse, breaking the armor there and wounding both pilots in it. By this time, Atlanta had been able to fire only seven shots, none of which hit either Union ship, and was hard aground with the high tide not due for another hour and a half. Weehawken and Nahant were able to freely maneuver into positions from which Atlanta's narrow gun ports would not allow her to reply and the damage already inflicted by the former ship made further resistance futile. Webb surrendered his ship within 15 minutes of opening fire before Nahant even had a chance to fire. Of the ironclad's 21 officers and 124 enlisted men, one man was killed and another sixteen were wounded badly enough to require hospitalization.