The first U-123 was a Type UE 2 U-boat of the Kaiserliche Marine ordered from Blohm and Voss of Hamburg on May 27, 1916. She was launched on January 26, 1918, and commissioned on July 20, 1918, under the command of Karl Thouret. She had no chance to conduct any war patrols before Germany surrendered. She ran aground on the English East coast on the way to be broken up in 1921.
During World War II, U-123 was a Type IXB U-boat of the Kriegsmarine. Her keel was laid down April 15, 1939, by AG Weser of Bremen. She was launched on March 2, 1940, and commissioned on May 30, 1940, with Kapitänleutnant Karl-Heinz Moehle in command. Moehle was relieved on May 19, 1941, by Kptlt. Reinhard Hardegen, who was relieved in turn on August 1, 1942, by Oberleutnant zur See Horst von Schroeter. Schroeter commanded until the boat was lost.
U-123 conducted twelve war patrols, sinking 45 ships totalling 227,174 tons and damaging six other totalling 53,568 tons.
On November 17, 1940, Mechanikergefreiter Fritz Pfeifer was lost overboard.
U-123 took part in the opening of the Paukenschlag (Operation Drumbeat) in January 1942 and completed two very successful patrols on the US east coast. On March 27, 1942, The Q-ship Atik (Carolyn) and U-123 had a gunnery duel off the US east coast. Fähnrich zur See Rudi Holzer from U-123 was fatally wounded in the action and died a few hours later. Atik was destroyed with all hands.
On November 7, 1943, U-123 was attacked by a Mosquito aircraft from the 618 Squadron suffering one dead and two wounded.
On June 17, 1944, U-123 was taken out of service at Lorient, France, and scuttled there on August 19, 1944. She was raised by France in 1945 after Germany's surrender, and became the French submarine Blaison. When France decommissioned her on August 18, 1959, she was known as Q165.