Ariel and Urchin, riding squid cycles (first seen in the episode "Red"), help pick up Sebastian and bring him to the palace. Sebastian is all excited, because it's the 25th year anniversary of the day he officially became King Triton's royal advisor. Although Triton doesn't remember the occasion at first, he quickly gives Sebastian a trophy in recognition for years of loyal service.
The gang, led by Ariel, head out to Quaking Canyon to look for gemstones. Flounder is apprehensive, as always, but Ariel insists that it'll be an adventure worth having. The gang enter a cave, but are trapped inside the entrance is blocked by a cave-in. They swim through the cave to find an alternate exit, and during this time poor unfortunate Flounder encounters a howling hairfish. Although Ariel saves Flounder, the howling hairfish manages to bite Flounder's tail. In order to escape, Urchin throws Sebastian's trophy at the howling hairfish to distract him.
Just as it seems that all is well, Flounder starts feeling a little "hairy", and transforms into a big male howling hairfish himself, fierce and several times larger than his usual size. Flounder the Howling Hairfish terrorises the merfolk of a village, leading to some of his "victims" teaming up to hunt Flounder down. Lone among them is one villager who suggest they see "The Fortune Teller" who might know a cure. Ariel, Urchin and Sebastian overhear this and decide to follow that villager.
During this time, Sebastian is mighty upset with Urchin for throwing the trophy, and can't let it go. Urchin himself loses his temper at Sebastian, and the two refuse to talk to each other.
The gang eventually find that the Fortune Teller lives in a secluded large shell (that doesn't look all that different from Ursula's own home). The Fortune Teller refuses to help the villager, who leaves dejectedly. But when Ariel, Urchin and Sebastian ask the same thing, the Fortune Teller explains that she loathes the villagers who drove her away. She further explains that the howling hairfish curse was cast long ago by a sea witch (who is not Ursula) and the only way to cure Flounder is with a magical silver mist.
Ariel soon figures out that the magical sea mist is a living school of silverfish, which apparently have the magical ability to stop the curse. They rush to save Flounder, who has been caught by those bad guys and trapped in a derelict ship about to fall down a bottomless chasm. But they manage to cure Flounder and escape the ship in the nick of time. Flounder, understandably, is upset with Ariel, but he forgives her. Sebastian, seeing this, decides to forgive Urchin as well. Then Urchin tells Sebastian it was just old trophy the king was going to throw away, but wanted to give it to him so he can be happy. Sebastia feels upset, and swims back to Atlantica. He came to King Triton, and talked about the trophy, and the king told the truth, and asked him if he can forgive him, which he does. Ariel, Flounder, Urchin, Sebastian, and the King share a heartwarming hug.