French counterintelligence officers finally grew wise to her and she was confronted by Captain Georges Ladoux. Ladoux informed her that he was going to have her deported back to Holland, whereupon she shocked him by proposing to spy on behalf of France and against Germany. Bragging that she had access to high level German intelligence, she offered that she could make it available to France. In so offering this aid, she destroyed her original alibi that she was not involved in espionage nor privy to any intelligence. Ladoux, pretended to take her up on her offer and sent her off to Brussels with the names of six French agent with whom she could make contact. Almost immediately thereafter, Ladoux received information from the British that one of the six agents had been arrested by the Germans, thus convincing him that she was a considerable security risk and ordered her arrested immediately.

German intelligence had come to find that Mata Hari had been identified and therefore compromised. She was therefore of little use to them. After offering her services to other Foreign nations, she boldly demanded from Jagow that she be paid in full for her espionage activities. Jagow ordered her to return to France where she would be paid. French authorities arrested her on February 13, 1917 and took her to the Fauborg Saint-Denis prison.

Mata Hari was tried for espionage in July 1917, represented by one of the top attorneys in France. Although much of the evidence against her was weak, French authorities were able to show that the payment she returned to France to collect was designated for German agent H.21. The "H" signified that she was an agent for Germany before World War I started. She argued that the payment was for her sexual services and not for espionage. The jury was unmoved, quickly returning a guilty verdict and sentencing her to death. On October 15, 1917 a calm Mata Hari faced a firing squad and was executed.