The USS Liberty was about 14 miles (22.5km) off the coast of Egypt when it was attacked by Israeli fighter planes.
Israel says its aircraft opened fire after mistaking the Liberty for an Egyptian ship believed to have been shelling Israeli forces in the Sinai.
The Liberty sustained massive damage from the Israeli ordnance and fire caused by napalm bombs.
Several minutes after the air assault ended, Israeli torpedo boats arrived and attacked the Liberty after coming under fire from the stricken ship.
One of the torpedoes scored a direct hit on the starboard side, killing 25 people and leaving a gaping 40ft (12 metre) hole below the waterline.
Of the Liberty's 297-strong crew, 34 died and at least 170 were injured in the attack.
Several Israeli and US inquiries concluded the attack was an accident, but some survivors and others believe the truth has been covered up.
Israel apologised for the attack and paid nearly $13m in compensation. The case was officially closed between the US and Israeli governments in December 1987.