A sixteen-year-old mermaid princess named Ariel is dissatisfied with underwater life and curious about human life on land. With her best friend Flounder, along with Hubie, Marina and Rocko, Ariel collects human artefacts and goes to the surface of the ocean to visit Scuttle the seagull, who offers very inaccurate knowledge of human culture and watches over Petra, Beanie, Timmy and Bonkers D, Bobcat.
Ariel ignores the warnings of her father King Triton, the ruler of Atlantica, and his adviser and court composer Sebastian that contact between merpeople and humans is forbidden, longing to join the human world and become a human herself.
One night, Ariel, Flounder, Hubie, Marina, Rocko and an unwilling Sebastian travel to the ocean surface to watch Prince Eric celebrate his birthday. Ariel soon falls in love with Eric. A storm ensues and the ship is destroyed, but Ariel saves an unconscious Eric from drowning. Ariel sings to him, but quickly leaves as soon as he regains consciousness to avoid being discovered. Fascinated by the memory of her voice, Eric vows to find who saved and sang to him, and Ariel vows to find a way to join him and his world. Noticing a change in Ariel's behaviour, Triton questions Sebastian and Hubie about her behaviour. Marina, afraid that Triton could surely punish her husband, tells him the truth about Ariel falling in love with a human.
Frustrated, Triton confronts Ariel in her grotto, where she and Flounder store human artefacts, and destroys most of the objects with his trident to her dismay. After Triton leaves, two eels named Flotsam and Jetsam convince Ariel to visit Ursula the sea witch in order to be with Eric. Hubie, Marina, Rocko, Sebastian and Flounder pursue them.
Ursula makes a deal with Ariel to transform her into a human for three days in exchange for Ariel's voice, which Ursula puts in a nautilus shell. Within these three days, Ariel must receive the "kiss of true love" from Eric; otherwise, she will transform back into a mermaid and belong to Ursula. Despite saying that she is doing this out of kindness, Ursula is plotting to use Ariel as a bargain to challenge Triton's right to rule and is even helping Drake, a former enemy of Hubie, to capture Marina and make her his wife.
Ariel is then given human legs and taken to the surface by Hubie, Marina, Rocko, Flounder and Sebastian. There they meet up with Petra, Beanie, Timmy and Bonkers and explain everything. Even Sebastian finally gives in and decides to help.
Eventually, Eric finds Ariel and takes her to his castle, unaware that she had saved his life earlier, he and his staff assuming her to be a mute shipwreck survivor. Ariel spends time with Eric, and at the end of the second day, they almost kiss (thanks to Sebastian, Hubie and his friends singing them a love song) but are thwarted by Flotsam and Jetsam. Angered at their narrow escape, Ursula disguises herself as a young woman named Vanessa and appears onshore singing with Ariel's voice. Eric recognises the song and, in her disguise, Ursula casts a hypnotic enchantment on Eric.
The next day, Ariel finds out that Eric will be married to the disguised Ursula. Scuttle and the bird kids discover that Vanessa is actually Ursula in disguise, and informs Ariel and the others who immediately pursue the wedding barge. Sebastian informs Triton, and Scuttle disrupts the wedding with the help of the kids and various animals. In the chaos, the nautilus shell around Ursula's neck is broken, restoring Ariel's voice and breaking Ursula's enchantment over Eric. Realising that Ariel had saved his life, Eric rushes to kiss her, but the sun sets and Ariel transforms back into a mermaid. Ursula reveals herself and kidnaps Ariel. A second later, Drake appears, knocks out Hubie and takes Marina to force her to be his bride. Furious, Triton confronts Ursula and Drake and demand that they release Ariel and Marina, but the deal is inviolable. At Ursula's urging, the king agrees to take Ariel's place as Ursula's prisoner. Ariel is released as Triton transforms into a polyp, and Ursula declares herself the new ruler of Atlantica. Frustrated, Ariel confronts Ursula and lunges at her. Ursula is about to use the trident to kill her, while Drake tries to take Marina away. But Hubie had eventually woken up, thanks to the kids and him, Rocko and Bonkers along with Eric dive into the sea and throw a harpoon at Ursula, saving Ariel. Flotsam and Jetsam capture Eric and Bonkers just as Ursula attempts to kill them. Rocko attacks Ursula, who inadvertently kills Flotsam and Jetsam. Hubie attacks Drake, causing him to release Marina. In her rage, Ursula uses the trident to grow into monstrous proportions.
Ariel, Eric, Hubie, Marina and the others reunite on the surface just before Ursula grows past and towers over the two. She then gains full control of the entire ocean, creating a storm with a maelstrom that causes shipwrecks, one of which Eric commandeers. Just as Ursula attempts to kill Ariel, Hubie and his friends that had got trapped in the maelstrom, Eric fatally stabs Ursula with the ship's splintered bowsprit. A piece of debris crushes Drake.
Ursula's power breaks, causing Triton and the other polyps in Ursula's garden to revert into their original forms. Realising that Ariel truly loves Eric, Triton willingly changes her from a mermaid into a human. Ariel and Eric marry on a ship.
Afterwards, Hubie and his friends depart for land and they board a bus to their next destination. There they meet a lady named Luna.
.Rocko mentions to Sebastian that he behaves like Zazu. Hubie and his friends would eventually see him again in an upcoming movie.