Nelson was laid down in December 1922 and built at Newcastle by Armstrong-Whitworth. Launched in September 1925, she was commissioned in August 1927 and joined by her sister ship HMS Rodney (built by Cammell Laird) in November. She cost £ 7,504,000 to build and made partial use of the material prepared for the cancelled Admiral-class battlecruisers HMS Anson and Howe, planned sister ships of HMS Hood.
She was the flagship of the Home Fleet from launch. In 1931 the crews of both Nelson and Rodney took part in the Invergordon Mutiny. On January 12th 1934 she ran aground on Hamilton's Shoal, just outside Portsmouth, as she was about to embark with the Home Fleet to the West Indies.
On September 8th 1938, the Nelson was part of a fleet assembled that took part in exercises in the North Sea where it encountered and sailed past a small German task force led by the KMS Deutschland.
In late 1942, the Nelson was assigned to the British Pacific Fleet along with the Anson, Barham, Dunkerque, Hood, Richelieu and Strasbourg.