Ariel, a sixteen-year-old mermaid princess, is dissatisfied with life under the sea and curious about the human world. With her best friends Flounder, Spongebob Squarepants and Patrick Star. Ariel collects human artifacts and goes to the surface of the ocean to visit Scuttle the seagull, who offers very inaccurate and comical knowledge of human culture. On this particular day, Ariel meets Leonardo, Donatello, Raphael and Michelangelo who have been sailing around the ocean for quite some time and decides to stay with her for awhile. Ignoring the warnings of her father (King Triton) and court musician (Sebastian the Crab) that contact between merpeople and humans is forbidden, Ariel still longs to be part of the human world; to this end she has filled a secret grotto with all the human artifacts she has found ("Part of Your World"). While Sebastian, who was assigned to watch over Ariel and be sure she does not visit the surface again, tries to convince her that its better to live under the sea than in the human world ("Under the Sea").
One night, Ariel, Spongebob, Patrick, Leonardo, Donatello, Raphael, Michelangelo and Flounder meet Sora, Donald Duck and Goofy and travel to the ocean surface to watch a celebration for the birthday of Prince Eric, with whom Ariel falls in love. A sudden storm hits, during which everyone manages to escape in a lifeboat except for Eric who goes and rescues his dog Max, who was still traped on the ship. He saves Max but almost drowns until he is saved by Ariel, who drags him to the beach. She sings to him, but when he stirs awake he sees avision. She dives underwater when Max comes to Eric, Eric has a vague impression that he was rescued by a girl with a beautiful voice; he vows to find her, and Ariel vows to find a way to join Eric ("Part of Your World (Reprise)"). In the meantime, Sebastian, Flounder, Spongebob, Patrick, Sora, Donald, Goofy, Leonardo and his brothers vow to keep this a secret so no one will know what happened.
Triton and his daughers notice a change in Ariel, who is openly lovesick. Triton questions Sebastian about Ariel's behavior, during which Sebastian accidently reveals the incident with Eric. Triton furiously confronts Ariel and in her grotto, using his trident to destroy her collection of human treasures to their horror. After Triton leaves, a pair of eels, Flotsam and Jetsam, and their new companion Xever/Fishface (who is working for the Shredder and allie of Dogpound/Rahzar) convince a depressed Ariel that she must visit Ursula the Sea Witch (whom Plankton is working for to get the Krabby Patty Secret Formula from Mr. Krabs), who can supposedly make all her dreams come true. Suspicious about their plans, Leonardo, Donatello, Raphael, Michelangelo, Spongebob Partick, Sora, Donald and Goofy along with Sebastian & Flounder, follow them to find out what their up to.
By the time they get there, Ariel and Ursula have already made a deal. The Sea Witch will give Ariel a potion that will transform her into a human for three days ("Poor Unfortunate Souls"). Within these three days, Ariel must receive the "kiss of true love" from Eric; otherwise, she will transform back into a mermaid on the third day and become sole property of Ursula. As payment for legs, Ariel has to give up her voice, which Ursula magically traps in a shell she wears as a locket. Ariel's tail is transformed into legs and Sebastian, Flounder, Sora, Donald, Goofy, Spongebob, Patrick and Leonardo and his brothers drag her to the surface.
Eric and Max find Ariel on the beach. He initially suspects that she is the one who saved his life, but when he learns that she cannot speak, he discards that notion-to both the frustration of Ariel and Max (who knows the truth). He helps her to the palace, where the servants think she is a survivor of a shipwreck. Spongebob and Patrick, Sora, Donald, Goofy, Leonardo and his brothers are tasked with keeping an eye on Ariel as she spends time with Eric . At the end of the second day, while they almost kiss ("Kiss the Girl") but are thwarted by Flotsam, Jetsam and Fishface. Angered at their narrow escape, Ursula takes the disguise of a beautiful young woman named "Vanessa" and appears onshore with Plankton disguise himself as a hair pin singing with Ariel's voice. Eric recognizes the song, and in her disguise, Vanessa/Ursula casts a hypnotic spell of enchantment on Eric to make him forget about Ariel.
The next day, Ariel, Spongebob, Patrick, Leonardo, Donatello, Raphael and Michelangelo, finds out that Eric will be married to the disguised Ursula on a wedding ship. Sora, Donald, and Goofy also spend one day looking for Ursula in the hopes that they can force her to reverse the spell, but are unable to find her. She cries and is left behind when the wedding barge departs ( Leonardo and his brothers, Spongebob, Patrick, Sora, Donald and Goofy feel sorry for failing her again). Scuttle discovers that Vanessa and the hair pin is Ursula and Plankton in disguise, and informs Ariel. Ariel, Sora, Donald, Goofy, Leonardo, Donatello, Raphael, Michelangelo and Flounder chase the wedding barge, Sebastian, Spongebob, and Patrick informs Triton and Scuttle is assigned to literally "stall the wedding." With the help of various animals, the nautilus shell around Ursula's neck is broken, restoring Ariel's voice back to Ariel and breaking Ursula's enchantment over Eric. Realizing that Ariel was the girl who saved his life, Eric rushes to kiss her, but the sun sets and Ariel transforms back into a mermaid. Ursula reverts to her true form and she kidnaps Ariel.
Triton appears and confronts Ursula, but cannot destroy Ursula's contract with Ariel. Triton chooses to sacrifice himself for his daughter, and is transformed into a polyp. Ursula takes Triton's crown and trident, which was her plan from the beginning. Ursula uses her new power to gloat and Plankton's Giant Robot, forming a whirlpool that disturbs several shipwrecks, one of which Eric commandeers. Just as Ursula is set to use the trident to destroy Ariel and her friends, Eric turns the wheel hard to port, in effect ramming the ship's splintered bowsprit through Ursula's abdomen. In the meantime, Leonardo, Donatello, Raphael, Michelangelo, Sora, Donald and Goofy tell Plankton to go back to Bikini Bottom (including Fishface to go back to The Shredder in New York), but Plankton vowed that his fight with the Turtles, Sora, Donald and Goofy is not over and someday, he'll get revenge and the Krabby Patty Secret Formula, but, Donatello just implant a bomb in Plankton's giant robot and suddenly, explode that blast Plankton off to Bikini Bottom and landed in The Chum Bucket.
With Ursula and Plankton gone, her power breaks and the polyps in Ursula's garden (including Triton) turn back into the old merpeople. Later, after seeing that Ariel really loves Eric and that Eric also saved him in the process, Triton willingly changes her from a mermaid into a human using his trident. She runs into Eric's arms, and the two finally kiss. Ariel marries Eric in a wedding where both humans and merpeople (with the Turtles, Spongebob, Patrick, Sora and his friends happily watching) attend.
Epilogue: The Turtles, Flounder, Spongebob, Patrick, Sora, Donald and Goofy are later seen to clean Ariel's Grotto that her father destroy and replace all the damage stuff that She, Flounder, Spongebob and Patrick went to every sunken ships they found. They are all happy for Ariel and Eric and then Leo won't forget the time, that Mikey used his Space Hereos comic book as toilet paper. Leo then starts chasing after him - and it concludes with a furious Leo with a mop on Mikey, and everyone started to laugh.
Leonardo: We're not in Kansas anymore.
Michelangelo: I thought we're in Atlantica! (Raph punches in the back of his head)