In the inter-war years she was the largest warship in the world at a time when the British public felt a close affinity with the Royal Navy.When the German battleship Bismarck sailed for the Atlantic in May 1941, Hood was sent out in pursuit commanded by flag captain Ralph Kerr, C.B.E. and flying the flag of Vice-Admiral Lancelot Holland, together with the newly-commissioned Prince of Wales, to intercept the German ships before they could break into the Atlantic and attack Allied convoys. Holland’s ships caught up with Bismarck and her consort, the heavy cruiser Prinz Eugen, in the Denmark Strait between Greenland and Iceland on 24 May. Her name and general characteristics were familiar to most of the public, and she was popularly known as the Mighty Hood. Because of her fame, she spent a great deal of time on cruises and "flying the flag" visits to other countries. In particular she took part in a world-wide cruise between November 1923 and September 1924 in company with HMS Repulse and several smaller ships. This was known as the Cruise of the Special Service Squadron, and it was estimated that 750,000 people visited Hood during that cruise. The future First Sea Lord John H. D. Cunninghamserved aboard her as navigator for a period in 1920. In 1931 her crew took part in the Invergordon Mutiny.
Her near-constant active service, resulting from her status as the Royal Navy's most battleworthy fast capital ship, meant that her material condition gradually deteriorated, and by the end of the 1930s she was in poor condition and in need of refitting. The outbreak of World War II made it impossible to remove her from service, and as a consequence she never received the scheduled reconstruction afforded to other RN capital ships such as Renown and several of the Queen Elizabeth-class battleships. Her condition meant, among other things, that she was unable to attain her top designed speed.
By 05.45 the opposing battle groups had sighted each other. Admiral Lütjens was faced with a dilemma aboard Bismarck. His orders were to engage enemy commerce, not enemy warships let alone capital ships. Bismarck could outrun the British heavy units, but with the ice edge close by and enemy cruisers on his starboard quarter, he had little alternative but to engage in battle.
Admiral Holland ordered his force to open fire at 05:49. Initially Hood engaged Prinz Eugen instead of Bismarck, a mistake not realised untilHood fired the first salvo of the engagement at 05:52:30 at a range of approximately 12.5 miles (25,330 yards or 23,150 m). Hood's shells landed very close to Prinz Eugen causing minor shell splinter damage. Hood continued to race toward the German ships in an attempt to close the range and reduce the time Hood's decks were exposed to plunging fire. The German ships quickly found the range to Hood and she was hit first by an 8 inch (203mm) shell from Prinz Eugen on the boat deck which ignited 4 inch (102 mm) ammunition and UP rockets, causing a fire to burn out of control endangering the ship. Shortly afterwards Prinz Eugen shifted her aim to Prince of Wales following a semaphore order from Bismarck. At 05:55 Holland ordered "2 blue", a 20 degree turn to port, to enable Hood to bring her aft turrets to bear on Bismarck.
At about 06:00 (06:01 in German reckoning), as Hood was turning, she was struck by one or more shells from Bismarck's fifth salvo, fired from a range of 15 to 18 km (about 8 to 9.5 nautical miles). Almost immediately, a huge jet of flame burst out of Hood from the vicinity of the mainmast. This was followed by a devastating explosion that destroyed the after part of the ship. Hood's stern rose and sank rapidly, then her bow section reared up in the sea and sank. Its forward turret fired one last salvo, possibly from the doomed gun crew, just before the bow section sank. Hood, the pride of the Royal Navy, had sunk in 3 minutes. From Hood's first salvo to her disappearance beneath the waves, only eleven minutes had passed.
Of the 1,418 crew, only three men (Ted Briggs (1923–2008), Robert Ernest Tilburn (1921–1995) and William John Dundas (1921–1965)) survived; they were rescued about two and a half hours after the sinking by the destroyer HMS Electra.
The dramatic loss of such a well-known symbol of British naval power had a great effect on many people; some later remembered the news as the most shocking of World War II. Following the loss of Hood, the Royal Navy concentrated all available resources in pursuit of Bismarck andPrinz Eugen; although Prinz Eugen escaped, Bismarck was sunk under disputed circumstances after being brought to battle again on the morning of 27 May 1941.