The fleet had arrived at Scapa Flow between 25 and 27 November 1918, under the terms of the Armistice. Destroyers were anchored in Gutter Sound; battleships and cruisers lay north and west of the island of Cava. A total of 74 ships were eventually interned, guarded by rotating squadrons of the British fleet. Conditions aboard the German vessels deteriorated rapidly. The naval historian Arthur Marder described the state of affairs as "one of complete demoralization" -- discipline collapsed, food sent from Germany was monotonous and poor, recreation was limited to the ships themselves, and outgoing mail was censored. German officers were reported to be "dumb with shame" when British inspectors visited. The sailors caught fish and seagulls to supplement their diet, and a large amount of brandy was shipped over from Germany. Reuter himself, in poor health, transferred his flag to a light cruiser after revolutionary sailors -- the "Red Guard" -- kept stomping on his cabin roof.

At the Paris Peace Conference, the Allies argued over the fleet's fate. France and Italy each wanted a quarter of the ships. Britain wanted them destroyed, knowing redistribution would erode its naval advantage. Reuter, isolated from reliable information, learned of the Treaty of Versailles terms and feared the fleet would be seized -- either by a British government that might act unilaterally, or to be used against Germany if the peace treaty was rejected and fighting resumed. He began planning the scuttling in May 1919. A further reduction of crews on 18 June left him with men he trusted. His orders went out that day. Preparations had been underway for weeks: watertight doors left open, condenser covers removed, holes bored through bulkheads to ensure water would spread quickly once scuttling began.

The timing was opportune. The British First Battle Squadron had sailed out of Scapa Flow for exercises that morning, leaving only three destroyers (one under repair), seven trawlers, and a handful of drifters to guard the entire fleet. At noon, Friedrich der Grosse began listing heavily to starboard. Across the anchorage, the Imperial German Ensign rose on mainmasts as crews abandoned ship. The few British guard vessels rushed to beach what ships they could, saving 22 of the 74 -- but 52 sank. The last to go down was a battlecruiser at five o'clock. During the afternoon, 1,774 German sailors were fished from the water and transported to Invergordon. Admiral Fremantle denounced the scuttling as dishonourable. Reuter and his men, standing on the quarterdeck, listened with expressionless faces. Fremantle later admitted privately that he felt sympathy for Reuter, "who had preserved his dignity when placed against his will in a highly unpleasant and invidious position."

The sunken fleet created an underwater landscape that has endured for over a century. Entrepreneur Ernest Cox began salvage operations in the 1920s, buying 26 destroyers from the Admiralty for 250 pounds and raising several capital ships. Salvage continued for decades, prized partly because pre-nuclear steel -- produced before atmospheric nuclear testing contaminated global steel supplies with trace radioisotopes -- is ideal for manufacturing radiation-sensitive instruments like Geiger counters. Seven wrecks remain on the seabed: three battleships (Markgraf, Konig, Kronprinz Wilhelm) and four cruisers, all scheduled as ancient monuments since 2001 and designated a marine protected area in 2025. In 2019, three of the battleships were sold on eBay for 25,500 pounds each. The centenary that same year was marked by remembrance ceremonies attended by von Reuter's grandson and great-grandsons. Claude Choules, the last living military witness to the scuttling, died in 2011 aged 110 -- the last known combat veteran of the First World War.