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, Ariel collects human artifacts and goes to the surface of the ocean to visit Scuttle the seagull, who offers very inaccurate knowledge of human culture. She 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 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 behavior, Triton questions Sebastian about her behavior and learns of her love for Eric. Frustrated, Triton confronts Ariel in her grotto, where she and Flounder store human artifacts, 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.
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. Ariel is then given human legs and taken to the surface by Flounder and Sebastian. Eric finds Ariel on the beach 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 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 recognizes 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 discovers that Vanessa is actually Ursula in disguise, and informs Ariel who immediately pursues the wedding barge. Sebastian informs Triton, and Scuttle disrupts the wedding with the help of 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. Realizing 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. Furious, Triton confronts Ursula and demands that she release Ariel, 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, but Eric throws a harpoon at her and saves Ariel. Just as Ursula attempts to kill Eric, Ariel attacks Ursula, who inadvertently kills Flotsam and Jetsam. In her rage, Ursula uses the trident to grow into monstrous proportions.
Ariel and Eric 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 who is trapped in the maelstrom, Eric fatally stabs Ursula with the ship's splintered bowsprit. Ursula's power breaks, causing Triton and the other polyps in Ursula's garden to revert into their original forms. Realizing that Ariel truly loves Eric, Triton willingly changes her from a mermaid into a human. Ariel and Eric marry on a ship and depart.
Ariel gains human legs as a result of a myth, which states that every year when the high tide rises, the sea goddess, Ursula, grants merpeople the ability to walk on dry land until the next one occurs.