U-480 left Trondheim, Norway on January 6, 1945 for its third and last patrol. It did not return. In 1997, the wreck of a Type VIIC U-boat discovered by accident by divers at 50°22′4″N 1°44′10″W, 20 kilometres (12 mi) southwest of the Isle of Wight. The following year, it was correctly identified as U-480 by nautical archaeologist Innes McCartney. Subsequent research by the Naval Historical Branch established that it had fallen victim to the secret minefield 'Brazier D2' some time between January 29 and February 20. A mine had damaged the tail of U-480, sending it to the bottom 55 metres (180 ft) down. The entire crew of 48 was lost. Helmsman Horst Rösner only survived because he had been left behind in Norway for training. It was alleged that before leaving Norway a woman had been given a tour of U-480 while at dock and when Rösner heard of this, his superstitions got the better of him and he asked to be re-assigned to another Uboat.

U-480 was an experimental vessel, many considered it to be the first stealth submarine due to its special rubber coating called “Albernich” after the character in a Wagner opera that had a cloak of invisibility. The rubber contained a series of holes, which helped break up sound waves. There were problems with this technology: the material performed differently at different depths, due to the holes being compressed by water pressure, and securing the tiles to the submarine's hull required a special adhesive and careful application. The first tests were conducted in 1940, but it was not used operationally until 1944, with U-480.