Ariel, a sixteen-year-old mermaid princess, is dissatisfied with life under the sea and curious about the human world. With her best fish 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 and his adviser 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 a celebration for the birthday of Prince Eric on a ship, with whom Ariel falls in love. In the ensuing storm the ship is destroyed and Ariel saves the 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 sung 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. In frustration, Triton confronts Ariel in her grotto, where she and Flounder store human artifacts, and destroys most of the objects with his trident. After Triton leaves, a pair of eels, 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. 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 is the one who had saved him earlier, 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 beautiful 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 to make him forget about Ariel.
The next day, Ariel finds out that Eric will be married to the disguised Ursula. Scuttle discovers that Vanessa is Ursula in disguise, and informs Ariel who immediately goes after 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 is the girl who 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. Triton confronts Ursula and demands Ariel's release, 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 loses his authority over Atlantica. Ursula declares herself the new ruler and a struggle ensues in which Ursula accidentally kills Flotsam and Jetsam. In her rage, Ursula uses the trident to grow to monstrous proportions.
Ariel and Eric reunite on the surface just before Ursula grows past and towers the two. She then gains full control of the entire ocean, creating a storm with a maelstrom and shipwrecks, one of which Eric commandeers. As Ursula attempts to destroy a trapped Ariel in the maelstrom, Eric runs Ursula through the abdomen with the ship's splintered bowspirt, killing her. Ursula's power breaks, causing Triton and all the other polyps in Ursula's garden to revert back 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.