Formed on 1 October 1938 in Kiel under the command of Korvettenkapitän Werner Hartmann, it was named in honour of Kapitänleutnant Paul Hundius, a U-boat commander during World War I, that died on 16 September 1918 after his U-boat SM UB-103 was sunk by depth charges from British steamer Young Crow. The flotilla was disbanded in December 1939.