After leaving New York, the Challenger (Master John G. Waller) broke down and steamed to Savannah for repairs, but there were no facilities available and so she limped unescorted to Trinidad. At 09.52 hours on 17 May 1942, U-155 caught the ship on a slow zigzagging course 25 miles east of Granada and fired two torpedoes. The first struck the #3 tank amidships on the starboard side and the second abaft the #5 hold, causing the after magazine to explode. This destroyed the entire stern section and blew the 4in gun completely of its mounting. The engines were stopped and an SOS was sent, but received no reply. The gun crew spotted a light off the port beam and opened fire with the forward 3in gun (the ship was also armed with six .50cal guns) at 3000 yards. 18 rounds were fired without effect and the light eventually crossed the bow and dissappeared to the southwest. The ship carried nine officers, 32 crewmen, eleven armed guards and twelve passengers. She settled slowly and sank by the stern after one hour. Two armed guards, one passenger and five crewmen died on the vessel. 56 men abandoned ship in the two port lifeboats and were picked up eleven hours later by the armed yacht USS Turquoise (PY 18), which was led to the survivors by an aircraft and were landed at Trinidad.

The master John G. Waller later experienced another sinking, when he commanded the African Star, which was sunk by U-172 (Emmermann) on 12 July 1943.