The SS Tuscania and HMS Otranto sank off the island within eight months of each other in 1918.
The Tuscania had almost completed its transatlantic voyage, carrying 2,500 British and US troops, when it was torpedoed by a German U-boat.
Most on board were rescued by the Royal Navy but more than 200 men were lost at sea, with many swept up on the shore of Islay.
Another tragedy followed shortly after when the Otranto sank on 6 October . Amid a strong storm, the ship crashed into HMS Kashmir while travelling in convoy.
Many US troops were saved by HMS Mounsey but those that could not escape the Otranto were swept toward an Islay reef that wrecked the ship. Around 470 men died.
Almost a century on, the British, US, French and Germany navies paid their respects to the dead in a ceremony above the wreck of the Tuscania.
Aboard HMS Raider yesterday, Rev Dr Karen Campbell, national chaplain of the Royal British Legion Scotland, led a service while a wreath was laid at sea by Lord George Robertson of Port Ellen, whose grandfather was the police sergeant on Islay and dealt with the aftermath of the sinkings.
HMS Raider was joined at sea by the USS Ross, FS Andromede and FGS Lubeck, the ships providing the backdrop to First World War commemorations being held on Islay with the Princess Royal and First Minister Nicola Sturgeon to attend.
Legion Scotland’s national chairman Charlie Brown said: “We stay true to our commitment and the words ‘We will remember them’ by ensuring that the sacrifice of over 700 US servicemen and British crew members is never forgotten.
“We also pay tribute to the bravery and selfless actions of those on board the Royal Navy destroyer HMS Mounsey, who went alongside to save over 1,800 US servicemen who otherwise may have perished.
“It is heartwarming that in times of great tragedy and loss of life that the human spirit of comradeship and sense of belonging joins nations as one in the hope that peace will prevail over the loss of life.”
The Moderator of the General Assembly of the Church of Scotland, Right Rev Dr Derek Browning, said he will remember the heroism and kindness of Islay residents at the time of the tragedy as well as those who died.