From 1942 through 1946, the island served as a military coastal lookout station, which consisted of a lookout tower, radio antenna, roads, boat landing with tramway, and barracks. A staff of seven men on 24-hour duty kept a lookout for all passing vessels and submarines. In the 1960s the military built a photo-tracking station that was used until the mid-1960s.

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The bombing of Pearl Harbor on December 7, 1941 was followed by enemy attacks from submarines, anti-personnel bombs, and balloon attacks on the shores of the Pacific frontier. These caused the Navy to immediately establish a coastal lookout system with stations on each of the Channel Islands, including Santa Barbara Island.

The Navy completed construction of the Santa Barbara Island Coastal Lookout Station on August 12, 1942. It consisted of a wooden tower, antenna pole, a transmitter and roads; a small-gauge steel rail tramway with metal car ran from the dock to the quarters, operated by an electric-powered winch in a shed. Previously, on May 27, 1942, a state of emergency was declared throughout the Western Sea Frontier, and a special line of patrol boats was established well to seaward to guard against enemy attacks. Lookouts would, hopefully, spot enemy vessels or aircraft that sneaked through this barrier. All eight offshore islands had Coastal Lookout Stations in place and manned by this time.

Santa Barbara Island also became one of the Pacific Coast Aircraft Warning Radar Stations in 1942 and was equipped with an L-35 type SCR-588 radar. The 588 was already in production when the war broke out; it operated in the 200-megahertz frequency region and provided for height-finding as well as range azimuth indication for ground control of interception at medium range.

Cal Reynolds, interviewed in 1979, recalled his half-year stationed with coastal lookout personnel beginning in June of 1942. The Navy sent Reynolds and his fellow enlisted men from San Pedro; they reported by radio (island call number NCX 12) to headquarters in San Diego. An Army aircraft lookout group from Fort MacArthur joined them on the island. Duties included spotting submarines and reporting all passing vessels. Reynolds told of tearing down the Hyder's house in order to build two side-by-side barracks buildings, connected by an enclosed hallway. A kitchen with a cook provided food service for the enlisted men. A trail led from the barracks to the lookout tower on Signal Peak; both Army and Navy personnel shared the trail, barracks and tower for their respective duties.

Reynolds described duty at the station as "very hang loose . . . not a lot of regimentation, we stood our four on and eight off . . . it was a small island, there wasn't a lot to do on it." The men worked two weeks on the island and then received one week of leave. They kept chickens and rabbits in pens, fished and tended lobster pots: "[we] always had hot buttered lobster." The men didn't keep a garden because of the lack of water. The Navy had constructed a water storage tank and pumped water up from the dock. A weekly boat brought supplies and transferred men on and off the island. "It was a good life," Reynolds recalled, "an enjoyable experience."

After the Battle of Midway in June 1942, the perceived danger of enemy attack decreased on the West Coast and development of lookout stations ceased. The stations continued to be manned, however. Patrol boats serviced the stations and provided logistical support, such as relief of personnel, medical aid and delivery of supplies. No station activity beyond the routine disturbed life on the islands according to the messages sent to the Section Base in San Pedro. While some of the Coastal Lookout Stations extended their activities to include Army flash reports and transmitting vessel reports, Santa Barbara Island personnel reportedly only maintained the blackout capabilities of the lighthouses there.

The Coastal Lookout System was abolished July 1, 1945 and on July 17, the Commandant of the 11th Naval District took thirteen lookout stations out of service, including Santa Barbara Island. Most of the structures at Santa Barbara Island were removed and the remaining buildings and equipment on Santa Barbara Island was transferred to the Coast Guard. Records show these to be:

Landing: Posts for the frame landing were set on concrete bases sunk into the rock of the beach above which the landing was built. There were two levels, the first that was reached by a vertical ladder from a small boat. Large boats could not get close to the landing because of the shallow water and shore structure. The second level was connected to the lower landing by stairs. The upper landing had an open shed used for storing gear, a large I-beam with a trolley for hoisting heavy loads, and the lower section of a rail tramway.

Tramhoist: A hoisting unit for the tram car was located at the top of the bluff at the upper station of the rail tramway. The prime mover was a Ford V-8 engine. The hoist was equipped with about 250 feet of 1/2" steel wire rope. The free end of the rope was attached to the tram car.

Tanks: There was one steel tank of 500 gallon capacity, 9' 9" in diameter by 6 feet high, and one pine tank 12' 6" in diameter by 10 feet high of 10,000 gallon capacity. The filler pipe, of galvanized iron and 1 1/2" in diameter, ran about 500 feet from the landing to the tank.

Buildings: Two barracks buildings 16' by 36' made of plywood with tongue and groove floors were supported on three sills 4' by 6" each. The sills were set on 6' 6" posts. The roof was composition roofing over sheathing. These two buildings were joined together by a short hall about 4 feet wide at the middle of the 36' sides. There was also a galvanized iron building 7' 3" by 11', a small generator building 6' by 6' and an outside head. At the top of the island was the glassed observation tower with a small generator building and outside head.

Garage: A 12' by 14' garage was constructed of old packing cases. It was used to house a piece of automotive equipment and a trailer.

Other Equipment: There was a trailer with iron wheels. Electric power and telephone lines ran from the landing to the lookout tower. The electric light line ran from the lookout tower to the north light.

The Coast Guard concluded after an inspection of the above that the portions of value to them were the landing with all its equipment, the rail tramway, including car and hoist, the garage building, and the iron wheeled jeep trailer. However, it recommended that all the buildings be left in their present locations for the time being and that a jeep be procured for the use of the light tenders and be kept in the garage.

By 1948 the structures were "relatively intact" according to a park service report. By 1950 vandals had stolen the winch motor and the wooden water tank, and removal of plywood walls of the barracks resulted in their collapse. The landing platform was in good condition although the tramway was inoperable because of the loss of the motor.

When a party of park personnel visited Santa Barbara Island in May of 1953, they found the former Navy structures in bad repair. The inclined railway was almost useless: the motor had been stolen and the winch shack demolished. What remained of the two Navy barracks was nearly obliterated since vandals had burned the structures. The Coast Guard shack was standing but the door had been blown off. The observation tower and shack on Signal Peak still stood.

In the early 1960s the Naval Ordnance Test Station, China Lake, installed a photo tracking station on Santa Barbara Island to record the flight of test rockets. The Navy constructed two 48-foot by 20-foot Quonset huts and three cement camera pads, installed two water tanks with a pipeline to the shore, extended the existing railway, and enlarged the previous trails to road width. The new road extended from one side of the island to the other so that jeeps could travel between the camera pads and to the Quonset huts. When the Navy left the island it surplussed the camera pads, eight to ten generators, and the two large Quonset huts to the National Park Service.