On 22 Apr. 1864, in an attempt to navigate downstream and retake the town of New Bern from Union forces, the recently completed Neuse ran aground on a sandbar one-half mile below Kinston. It remained stuck there for almost a month. During this period, its support troops were transferred from Kinston to Virginia, preventing a second attempt to retake New Bern when the Neuse was finally freed. On 12 Mar. 1865, as the Confederacy was collapsing, Cdr. Joseph Price, on orders from Gen. Braxton Bragg, ordered his crew to shell advancing enemy cavalry and then burn the Neuse to prevent its capture. Before fire consumed the vessel, a loaded gun discharged and blew a hole in the Neuse, which sank rapidly. Shortly after the war, machinery and armor were salvaged from the Neuse. After settling on the river bottom, it lay undisturbed except for shifting sands and slight exposure during periods of low water until 1961.
Driven by curiosity and a rumor that a barrel of gold could be found on the old gunboat, three Kinston men began a salvage project that lasted until June 1963. By the time the Neuse was cut into three sections and transported five miles to Governor Caswell Park in Kinston, a great number of citizens, groups, clubs, and political leaders, including the governor of North Carolina, had contributed in some way to the recovery of the Neuse. Artifacts and hull remains are on display at the CSS Neuse State Historic Site and Governor Richard Caswell Memorial in Kinston.