In September 1936, Harwood was appointed commodore and given command of the South American Division of the America and West Indies Station, whilst at the same time serving as commanding officer of the cruiser HMS Exeter.[2] At the outbreak of the Second World War, command of HMS Exeter passed to Captain F. S. Bell. Commodore Harwood remained in Exeter until he transferred his pennant to HMS Ajax on 27 August.[4]
Harwood suspected that Graf Spee would try to strike next at the merchant shipping off the River Plate estuary. With Cumberland being absent for repairs, Harwood deployed his other three cruisers off the estuary on 12 December. In the ensuing Battle of the River Plate on 13 December, Harwood's cruisers were damaged, but so was Graf Spee, which fled to Montevideo in neutral Uruguay. She was scuttled there a few days later.[5] For this action, Harwood was promoted to rear admiral and knighted.