Arctic was built by Hall Bros. at Eagle Harbor, Washington, in 1913. She was inspected by the Navy on 17 October 1917 and found to be suitable for naval service. Accordingly, her owner, the Independent Asphalt Paving Co., of Seattle, Washington, delivered the tug to the Navy on 4 December 1917. Fitted out at the Puget Sound Navy Yard, Bremerton, Washington, and designated SP-1158, Arctic was placed in commission there on 15 January 1918, LTJG Ernest G. Heinrici, USNRF, in command.