Funny that this topic came up. As a boy, I didn't know how to swim, but I leaped into the water off Cape Cod after something only I could see. I was rescued from drowning by a young mermaid, and an instant connection forms between us two. When my parents retrieved me, no one sees the mermaid, who weeps at the loss of her new friend before departing. I came to believe the encounter was a near-death hallucination, but my bond with the mermaid proves so strong that my subsequent relationships with women invariably fail as I subconsciously seek the connection I felt with the mermaid.

Years later, now co-owner with my womanizing brother Freddie of a wholesale fruit and vegetable business in New York City, being depressed after my latest breakup, returned to Cape Cod, where I briefly encounter an eccentric scientist named Dr. Walter Kornbluth, and again falls into the sea. I woke up on a beach where I encountered a beautiful nude woman who, unknown to me, is the mermaid I met as a boy (she is wearing the same necklace she wore as a girl). I instantly become attracted to her, as she again saves me from drowning. But after kissing me, she dives into the sea and leaves me to return home. Kornbluth, while diving seeking proof of strange sea creatures, also encounters the mermaid in her sea form, whom he becomes obsessed with finding again.

The mermaid finds my wallet that I dropped in the water and decides to find me in New York. She comes ashore at Liberty Island nude, where she is arrested for indecent exposure. The crowd boos at the cops for arresting a beautiful woman just because she is nude. Garnering information from my wallet (which she still carries), the cops call me and I raced to the police station. She gets released into my care. After a series of comedic events where us two are unable to control our urges, the mermaid goes out to buy some clothes at Bloomingdales. She later picks up English from watching television all day at Bloomingdale's. Needing a name, I lists some choices as we walk. While doing so when on Madison Avenue, I ask myself aloud "Where are we? Madison," which the mermaid picks as her name.

I quickly fall in love with Madison, not realizing she is the mermaid I had subconsciously sought a reunion with all my adult life. While Madison requites my love, I find it hard to understand her unusual behavior (for example, eating an entire lobster, shell and all, at a White House dinner) and has trouble accepting that this relationship might go well. Meanwhile, Kornbluth, realizing that the nude woman at Liberty Island was the mermaid he had encountered, pursues the couple, although neither realize it at first.

When Kornbluth finally proves Madison is a mermaid by dumping water on her and turning her legs into a tail, she is taken in by government scientists for examination. At first jubilant at having proven his belief that mermaids exist, Kornbluth, who had only wanted people to stop thinking he was insane, deeply regrets his actions when Madison is studied like a laboratory specimen and slated for dissection. Meanwhile, myself, stunned by the revelation, lapses into mortification at having fallen in love with a "fish". "People fall in love every day," he bemoans, "and look what I got." But Freddie finally sets aside the lascivious humor that has typified him throughout life to break through my self-absorption: "People fall in love every day, is that what you said? Yeah? Well, that's a crock. It doesn't work that way." Freddie angrily berates me for giving up on Madison, with whom he has seen his brother so happy over the past few days. "A lot of people will never be that happy!" Freddie declares. "I'll never be that happy!" Realizing Madison's situation is more important than my mixed emotions, I call on various government officials, but no one will arrange for her freedom or even tell me where she is being held.

Desperate, I confront the guilt-ridden Kornbluth, who still has clearance to the lab where Madison is imprisoned. Impersonating two Swedish scientists, me and my brother enter the lab with Kornbluth, then myself and Kornbluth emerge with a figure concealed in blankets, claiming it to be the scientist impersonated by Freddie, who was attacked by "the creature," who is now too dangerous to approach; the panicking security guard closes off the lab until the head scientist arrives to receive a cheerful greeting from Freddie, who had remained in the lab while me and Kornbluth smuggled Madison outside in the blankets. After a pursuit through the streets of the city, she jumps back into the ocean. When she reveals that I can survive under water as long as i am with her, I realize she was the young mermaid I had met so long before, and although Madison warns me that if I come to live in the sea, I will be unable to return to the surface world (she does not specify why), we both continue our lives in what appears to be an underwater kingdom. The End.