At 04.08 hours on 7 June 1942 the unescorted Castilla (Master Davis B. Kerr) was struck by one torpedo from U-107 on the port side just forward of the #3 hatch. An uncontrollable fire broke out below the waterline in this hatch. The ship settled by the head at once with a list to port and then settled by the stern and sank with the bow straight up. She sank so quickly that there was no time to launch the lifeboats, only four rafts were released. At 13.40 hours, the U-boat approached the sinking position, spotted three rafts and took a buoy of the ship aboard for identification.

The master, 20 crew members, two armed guards were lost. One crew member died later on a raft and was buried at sea. 28 crew members, five armed guards and two passengers were picked up by USS Nike (WPC 112) after six days in position 21°03N/83°30W and were landed at Key West.