Out on the open sea, Prince Eric pursues a mysterious voice, despite the protests of his guardian, Grimsby ("Fathoms Below"). Far beneath the waves, the crab, Sebastian, has prepared a concert for King Triton that features his youngest child, Ariel ("Daughters of Triton"), but she has snuck up to the surface with her best friend, Flounder. There, they learn from the seagull, Scuttle, about the human treasure she has found ("Human Stuff"). Meanwhile, the sea witch, Ursula, and her lackey eels, Flotsam and Jetsam, bemoan their exile and plot to regain power from Triton, using Ariel as bait. King Triton scolds Ariel for going to the surface and appoints Sebastian as her chaperone. Ariel retreats to her grotto and dreams of living on land ("Part of Your World"). Upon discovering her collection of human objects, Sebastian extols the virtues of the ocean ("Under the Sea"). Distracted by the shadow of a great ship, Ariel swims to the surface and finds the handsome Prince Eric on board. Suddenly, lightning strikes the ship, sending Prince Eric overboard ("The Storm"). Ariel darts into action and brings the unconscious prince to shore ("Part of Your World – Reprise"). Her song wakes Prince Eric, but she has disappeared into the waves.

Back underwater, the Mersisters grill Flounder about Ariel's odd behavior ("She's in Love"). Furious about Ariel's contact with a human, King Triton destroys all her precious objects. Flotsam and Jetsam find Ariel in despair and lure her to the sea witch's lair. Ursula offers to change Ariel into a human in exchange for her voice ("Poor Unfortunate Souls"). Prince Eric must kiss her within three days or Ariel will turn back into a mermaid and become Ursula's slave. On the beach, Prince Eric finds Ariel and brings her home to the palace. Sebastian follows to protect Ariel, but finds himself in jeopardy in Chef Louis's kitchen ("Les Poissons"). Ariel's silence prompts Prince Eric to find other ways to communicate, like dancing ("One Step Closer"), but he is still haunted by the mysterious voice. On the second day, Sebastian calls on lagoon animals to serenade the couple ("Kiss the Girl"), but Flotsam and Jetsam cause a commotion that blocks their kiss.

Grimsby arranges a singing contest on the third day in order to locate the owner of the mysterious voice (and thus a bride for Prince Eric) but, when Ariel breaks through the crowd and dances, Prince Eric realizes how much he loves her and begins to propose. However, the sun sets and the spell is broken, turning Ariel back into a mermaid and drawing her into the sea. Sebastian rushes to warn King Triton, who agrees to hand over his trident and take Ariel's place as Ursula's slave ("Poor Unfortuate Souls – Reprise"). When Prince Eric attempts to rescue Ariel, Ursula loses control of her magic shell and Ariel's voice is restored. Trident in hand, Ursula attempts to harness the power of the seas, but creates a whirlpool that destroys her and the eels. With peace restored, Ariel returns the trident to her father. King Triton realizes how much Ariel cares for Prince Eric and decides to restore her humanity. He gently deposits her on the shore, and Prince Eric rushes up and proposes. As Ariel answers, Prince Eric realizes that it has been her voice all along ("Part of Your World – Finale").