Madison is the archetypal fish-out-of-water in the most literal sense. She is innocently curious about the human world and prone to fall in love with the first man she saves from drowning. She finds herself in the city which supposedly has no happy endings: New York. This city provides the backdrop to Madison's angst, her drama, and her many comedic contributions to the already-quite-humorous story. Out of innocence and necessity, she at first enters New York naked and then wearing Allen's clothes. She then gets said Allen into a number of awkward little situations as she is excited by everything she encounters, and names herself after Madison Avenue. She cries while watching "Bonanza" on television, thinking that a man shooting another man on-screen is in fact a real murder, and then receives a gift offered by Allen under the assumption that the package itself is the extent of the gift. She later is at a fancy restaurant and reveals that mermaids are not accustomed to cutlery.
Still, what endears the audience to Madison as a character is not that her deeds are done with ignorance, but that they are done with innocence. She is as likely to express herself by kissing as by speaking, swift to forgive even those who do the most horrible things to her, courageous in a preciously-gentle manner, and seems to be most motivated by love..
Hannah was chosen to play the role of Madison because she exuded a sort of innocence that seemed otherworldly, and it was because of this quality that the character has become so iconic.
In her first appearance, Madison exhibits a number of superhuman abilities due to her being a mermaid. These include:
- Mermaid Tail: Madison can swim faster and more efficiently than even a military man in scuba gear, and can use her tail to evade hazards in the water. This power is listed as "mermaid tail" rather than "mermaid swimming" because it was granted to Daryl Hannah in real life for as long as she wore her tail in the water. The mermaid tail is a prosthetic which included a built-in monofin, enabling Daryl to swim faster than human wearing individual swim fins, and in recent years tails of equal quality have become available to professional (performing) mermaids.
- Water Breathing: In mermaid form, Madison can breathe water as well as air and can thus remain submerged indefinitely.
- Vocal Modulation: Madison's real name is a sound so high-pitched that it can shatter glass, which suggests that her natural speech patterns are much like those of the bottle-nosed dolphin (though it is unknown whether she can speak with them or other cetacean non-human persons). Nevertheless, she can also speak human dialects with ease and even possesses a limited ability to read and speak English (which she enhances by imitating what she sees on television).
- Mermaid Kiss: Madison's kiss bestows the ability to breathe underwater, so long as the recipient remains in fairly close proximity to her. She gives this kiss freely to those people (and objects) for which she has affection, but the resulting water breathing ability is only bestowed if the kiss is delivered underwater while Madison is in full mermaid form.
- Mermaid Metamorphosis: Due to her human half being the dominant characteristic, Madison may at times transform into a full human being. Doing this requires her entire body to have been out of the water long enough to have completely dried off, at which point it will transform into a pair of human legs. However, Madison's connection to the sea means that she must transform back into a mermaid once every 24 hours (though this was only specifically stated in a deleted scene involving Madison's meeting with the sea witch), which is accomplished by bathing her legs in saltwater. Additionally, despite the convenience of being able to assume both human and mermaid forms, the transformation is not consciously voluntary; merely splashing Madison with a sufficient quantity of water will cause her legs to instinctively be drawn together by muscular spasms and revert to a mermaid tail.
Madison displays new abilities in the second movie. She lost some of these because of her first transformation into a human. These include:
- Aquatic creature communication: Madison can communicate with cetaceans like dolphins. Dolphins would swim with and play with her and a dolphin can recognize her as a mermaid even in human form.
- Water sensing: No matter where she is or how far from the ocean she is, Madison can always sense which direction the sea is in and find her way back to her element.
- Water visions: By running her finger in a circular motion over water, Madison can create windows that allow her to see anyone anywhere in the world. She can also communicate with people via these windows though the other person will only be able to hear her and not see her. Madison only just got back this ability in the second movie as she lost it after her first human transformation.
Madison is a mermaid who twice saves her childhood love, Allen Bauer, from drowning. After kissing him, she dives into the sea and leaves Allen to return home.
Madison finds Al's wallet and shows it to the police who arrest her for Public Nudity. She later has a romantic relationship with Al. However, Madison is publicly revealed to be a mermaid when she is splashed by Walter Kornbluth outside a restaurant and is summarily captured by scientists. At first, Al avoids her, in shock that his beloved was a mermaid, but later he rescues her from the lab with the help of his brother Freddie and Kornbluth himself, because the former helps him to realize that he still loves her. They then escape the authorities by jumping into the bay, for mermaids have the special power to enable those close to them to breathe underwater. Al joins Madison in the underwater world, even though she tells him that he can never return to the human world. However, years later, they find it necessary to return to dry land for a while, as Allen becomes bored on their deserted island hideaway and admits he misses life in New York City and his brother Freddie.