The Indy crossed paths with the Japanese submarine I-58, LCDR Hashimoto commanding, on 29 July 1945. Three torpedoes hit the ship and it went down in under an hour. Of 1,196 men aboard, about 900 abandoned ship; 321 survivors were rescued beginning 2 August 1945. Sharks got the rest.
Indianapolis was a victim of the Navy's ship's movement reporting system at the time. Indy's position was plotted and noted when the ship transitioned from the Headquarters of Commander Marianas on Guam to the Commander Philippine Sea Frontier on Leyte. For capital ships like Indianapolis, it was ASSUMED that they reached their destinations on time, unless reported otherwise. Actual ship positions were based on predictions, and not reports. There was no feedback loop where Commander Philippine Sea Frontier, Leyte, notified Commander Marianas on Guam that Indy had actually arrived.
The Indianapolis sent distress calls before sinking. Three stations received the signals; however, none acted upon the calls. One commander was drunk, another had ordered his men not to disturb him and a third thought it was a Japanese trap. For a long time the Navy denied that a distress call had been sent. The receipt of the call came to light only after the release of declassified records.
When the ship did not reach Leyte on the 31 july 1845 as scheduled, no report was sent that she was overdue. This omission was due to a fault in the Movement Report System.
The Navy never addressed why a large capital ship, such as the Indianapolis, was steaming from Guam to the Philippines without an escort.
In November 1945, CAPT Charles McVay III was court martialed and convicted of “hazarding his ship by failing to zigzag.”
Several things about the court martial were controversial. There was evidence that the Navy itself had placed the ship in harm's way, in that McVay’s orders were to “zigzag at his discretion, weather permitting.” Further, LCDR Hashimoto, commander of I-58, testified that zigzagging would have made no difference.
Fleet Admiral Chester Nimitz remitted McVay’s sentence and restored him to active duty. McVay retired in 1949.[18] While many of Indianapolis's survivors said McVay was not to blame for the sinking, the families of some of the men who died thought otherwise. The guilt placed on McVay’s shoulders mounted until he committed suicide in 1968.
In October 2000, the United States Congress passed a resolution that Captain McVay’s official record should state that “he is exonerated for the loss of Indianapolis.” President Bill Clinton signed the resolution. The resolution noted that although several hundred ships of the U.S. Navy were lost in combat in World War II, McVay was the only captain to be court-martialed for the sinking of his ship. In July 2001, the Secretary of the Navy ordered McVay’s record cleared of all wrongdoing.