Alabama was decommissioned for the final time on 7 May 1920, having spent the previous nine months inactive at Philadelphia.
The ship was transferred to the War Department for use as a target ship on 15 September 1921, and she was stricken from the naval register.
She was allocated to bombing tests conducted by the US Army Air Service on 27 September 1921, under the supervision of General Billy Mitchell.
In addition to Alabama, the old battleships New Jersey and  Virginia were to be sunk in the tests.
The first phase of the testing began on 23 September, and included tests with chemical bombs, including tear gas and white phosphorus, to demonstrate how such weapons could be used to disable command and control systems and kill exposed personnel.
That night, another test with 300 lb (136 kg) demolition bombs took place, the purpose of which was to determine whether flares could sufficiently illuminate a target for precise bombing.
The second phase took place the next morning, and it was a much larger operation.
The 1st Provisional Air Brigade took part in the tests, which were to simulate a combat scenario.
A group of eight Royal Aircraft Factory S.E.5s, armed with 25 lb (11 kg) bombs attacked first; their bombs and machine gun fire were intended to simulate clearing the decks of anti-aircraft gunners in preparation for the heavy bombers.
Four Martin NBS-1 bombers attacked next, with 300 lb (136 kg) bombs at an altitude of 1500 ft (457 m).
Two of the bombs hit the deck toward the bow.
Three more NBS-1s followed with 1100 lb (499 kg) armor-piercing bombs, though none of these hit.

On 25 September 1921, the last round of tests took place.
Seven more NBS-1s attacked the ship; three carried 1,100 lb (499 kg) bombs, while the other four carried one 2,000 lb (910 kg) bomb each.
One of the 2,000 lb (907 kg) bombs landed close to the ship on the port side; the mining effect caused considerable damage, and Alabama began listing to port.
The bombers scored two more near-misses with the 2,000 lb (907 kg) bombs, followed by a direct hit and two near misses with the 1,100 lb (499 kg) bombs.
The last bomb, a 2,000 lb (907 kg) weapon, struck the ship at her stern.
The blast broke her anchor chains, and the battered ship began to drift toward the wrecks of San Marcos and Indiana, the latter having been sunk in bombing tests earlier that year.
The ship remained afloat for another two days before finally sinking in shallow water on 27 September 1921.
Mitchell attempted to use the sinking as evidence of the predominance of the bomber in his efforts to secure an independent air force, though the Navy pointed out that the ship was stationary, undefended, unmanned, and was not protected with the latest "all or nothing" armor scheme.
The sunken wreck was sold for scrap on 19 March 1924.
Alabama was decommissioned for the final time on 7 May 1920, having spent the previous nine months inactive at Philadelphia. The ship was transferred to the War Department for use as a target ship on 15 September 1921, and she was stricken from the naval register. She was allocated to bombing tests conducted by the US Army Air Service on 27 September 1921, under the supervision of General Billy Mitchell. In addition to Alabama, the old battleships New Jersey and  Virginia were to be sunk in the tests. The first phase of the testing began on 23 September, and included tests with chemical bombs, including tear gas and white phosphorus, to demonstrate how such weapons could be used to disable command and control systems and kill exposed personnel. That night, another test with 300 lb (136 kg) demolition bombs took place, the purpose of which was to determine whether flares could sufficiently illuminate a target for precise bombing. The second phase took place the next morning, and it was a much larger operation. The 1st Provisional Air Brigade took part in the tests, which were to simulate a combat scenario. A group of eight Royal Aircraft Factory S.E.5s, armed with 25 lb (11 kg) bombs attacked first; their bombs and machine gun fire were intended to simulate clearing the decks of anti-aircraft gunners in preparation for the heavy bombers. Four Martin NBS-1 bombers attacked next, with 300 lb (136 kg) bombs at an altitude of 1500 ft (457 m). Two of the bombs hit the deck toward the bow. Three more NBS-1s followed with 1100 lb (499 kg) armor-piercing bombs, though none of these hit.
On 25 September 1921, the last round of tests took place. Seven more NBS-1s attacked the ship; three carried 1,100 lb (499 kg) bombs, while the other four carried one 2,000 lb (910 kg) bomb each. One of the 2,000 lb (907 kg) bombs landed close to the ship on the port side; the mining effect caused considerable damage, and Alabama began listing to port. The bombers scored two more near-misses with the 2,000 lb (907 kg) bombs, followed by a direct hit and two near misses with the 1,100 lb (499 kg) bombs. The last bomb, a 2,000 lb (907 kg) weapon, struck the ship at her stern. The blast broke her anchor chains, and the battered ship began to drift toward the wrecks of San Marcos and Indiana, the latter having been sunk in bombing tests earlier that year. The ship remained afloat for another two days before finally sinking in shallow water on 27 September 1921. Mitchell attempted to use the sinking as evidence of the predominance of the bomber in his efforts to secure an independent air force, though the Navy pointed out that the ship was stationary, undefended, unmanned, and was not protected with the latest "all or nothing" armor scheme. The sunken wreck was sold for scrap on 19 March 1924.
USS Alabama (BB-8)