Based upon the successful employment of ironclad warships, particularly batteries, at the Battle of Kinburn, Britain and France decided to focus on armor plated warships, starting with coastal battery designs. Initial ocean going ironclad cruisers, such as the French Gloire and the British HMS Warrior were only just emerging in 1859 and 1860, and were beyond the budget and timeline necessary for rapid force deployment that the CS Navy needed for immediate coastal defenses in 1861.

Therefore, the Confederate Congress voted $2 million in May 1861 to buy ironclads from overseas, and in July and August started work on construction and converting wooden ships locally. On 12 October 1861, the Manassas became the first ironclad to enter battle when she fought Union warships on the Mississippi. In February 1862, the even larger Virginia joined the Confederate Navy, having been built at Norfolk. The Confederacy built a number of ships designed as versions of the Virginia, of which several saw action. In the failed attack on Charleston on April 7, 1863 two small ironclads, Palmetto State and Chicora participated in the successful defense of the harbor. For the later attack at Mobile Bay, the Union faced the Tennessee, the Confederacy's most powerful ironclad.

The Confederacy intended to use the European ironclads to break the Union blockade. Aside from those built in Europe, the Confederacy also manufactured their own vessels. Despite a lack of materials (especially iron and engines) and ship-building facilities, the Confederacy was able to construct at least twenty ironclads that were commissioned and put into operation during the war.

One of the more well-known ships was the CSS Virginia, formerly the sloop-of-war USS Merrimack (1855). In 1862, after being converted to an ironclad ram, she fought USS Monitor in the Battle of Hampton Roads, an event that came to symbolize the end of the dominance of large wooden sailing warships and the beginning of the age of steam and the ironclad warship.

The Confederates also constructed submarines, among the few that existed after the early Turtle of the American Revolutionary War. Of those the Pioneer and the Bayou St. John submarine never saw action. However, Hunley, built in Mobile as a privateer by Horace Hunley, later came under the control of the Confederate Army at Charleston, SC, but was manned partly by a C. S. Navy crew; she became the first submarine to sink a ship in a wartime engagement.

The Hunley later sank the sloop-of-war USS Housatonic, resulting from the large blastwave that traveled from its exploding spar torpedo's 500-pound black powder charge, during the sinking of USS Housatonic. The sinking of the Housatonic became the first successful submarine attack in history.

Confederate Navy commerce raiders were also used with great success to disrupt U.S. merchant shipping. The most famous of them was the screw sloop-of-war CSS Alabama, a warship secretly built for the Confederacy in Birkenhead, near Liverpool, United Kingdom. She was launched as Enrica but was commissioned as CSS Alabama just off the Azores by her captain, Raphael Semmes. She began her world-famous raiding career under his command, accounting for 65 U.S. ships, a record that still remains unbeaten by any ship in naval warfare. CSS Alabama's crew was mostly from Liverpool, and the cruiser never once dropped anchor in a Confederate port, though she sank a blockading Union gunboat off the coast of Texas. She was sunk in June 1864 by USS Kearsarge at the Battle of Cherbourg outside the port of Cherbourg, France.

A similar raider, CSS Shenandoah, fired the last shot of the American Civil War in late June 1865; she did not strike her colors and surrender until early November 1865, in Liverpool, England five months after the conflict had ended.