Set some unspecified time after the events of the original film, the film begins with a celebration for Ariel and Eric's newborn daughter Melody on a ship at sea, watched by merpeople and Ariel's six older sisters, Aquata, Arista, Attina, Andrina, Adella and Alana, Melody's maternal aunts. Ariel's beloved father, King Triton, presents his newborn granddaughter with a magic seashell locket, which is meant to remind her of her half mermaid heritage. The party is interrupted by Morgana, the younger sister of the late Ursula, who threatens to cause Melody harm, using her as leverage to get Triton's Trident. Ariel and Eric work together to foil Morgana's plan.
Fearing Morgana and remembering what happened with Ursula, Ariel decides to withhold all knowledge of the sea world from Melody, while deciding to keep Melody from going into the sea for her safety. The locket is tossed into the ocean, and a massive wall is built to separate the royal castle from the sea. In the meantime, Sebastian is tasked by Triton to watch over Melody. Flounder and King Triton return to Atlantica.
Twelve years later, Ariel and Eric are celebrating Melody's 12th birthday and are throwing her a party. However, Ariel is having trouble as Melody is missing and begins searching for her. Meanwhile, in the ocean, Melody, now a young pre-teen, is revealed to be regularly sneaking out into the ocean to swim without her parents realizing. Melody has inherited a lot from her maternal heritage, including a few mermaid abilities and has developed a deep love of the sea. However, Melody still remains unaware of her mermaid heritage and is banned from ever going into the sea, without an explanation. Due to the ban, she and Ariel have a rather rocky relationship as Ariel appears to strongly disapprove of anything related to the sea. As she continues to explore the ocean, she soon finds the locket and shows it to Sebastian and Scuttle.
Meanwhile, in the cold oceans of the South Pole, Morgana and Undertow have been in hiding, ever since Melody was introduced to the undersea world. Over the years, Morgana has been trying to turn Undertow back into his original form, but always fails. She again tries to turn him back and is almost successful, but the power of the trident is too strong for Morgana to overcome. When Undertow openly expresses his opinion that Ursula would have been able to break the spell, it is revealed that Morgana has always been jealous of her and is tired of living in her sister's shadow. Undertow and Morgana start to argue more until Morgana's magical crystal ball reveals that Melody has found her locket, revealing that Morgana has been keeping an eye on Melody ever since her birth celebration. With Melody having found and recovered her lost locket, Morgana sees this as a perfect opportunity, as when Melody uncovers the secret of the locket, she will want answers, which will lead Morgana to finally succeed at something her sister never could; Total control over all of the oceans.
Sebastian urges Melody to return to shore, warning her of the conquences if Ariel finds out she has been sneaking off and swimming in the ocean. Melody, however, doesn't understand her mother's "hatred" of the sea and longingly wishes she could tell her how she feels, but believes that Ariel would never understand. Melody then remembers about her birthday party her parents are planning and gets back to the castle without Ariel noticing. As Melody sneaks into the castle, she comes across some of the guests, but quickly leaves them, however shortly after she leaves, the guests begin to talk about Melody behind her back revealing they believe her to be strange as they have heard of her ability of speaking with sea creatures. However, unknown to them, Melody overheard everything they have said about her and sadly walks back to her bedroom.
Later, Ariel and Max are in the front garden of the castle, close to the wall. Ariel is upset that her father couldn't be here to celebrate Melody's birthday with them. Ariel then gains an idea and after checking to see that no one is around, she puts her feet into the ocean, to remind her of home, much to her happiness. However, Melody sees her mother from her balcony and asks what she is doing. Ariel makes an excuse and assures Melody she's coming. Melody then quickly prepares for her mother's arrival while hiding the shells she collected, while unknowingly tying Sebastian to her body as he helps her dress. Ariel then soon arrives.
In her dressing room, Ariel helps Melody prepare for the party. Melody confides in her mother that she doesn't really want to attend, revealing how she overheard some of the guests making fun of her. Ariel tries to reassure her daughter saying that everyone has trouble fitting in, but realizes that this is more than about the party. Ariel tells Melody that if she has anything troubling her, she can always tell her anything. Melody, now believing her mother will understand her true feelings is about to tell her her deep love of the sea, but are interrupted by Eric who takes Melody and Ariel into the ballroom for the party.
Arriving at the ballroom Melody is introduced and soon meets a young prince who asks for her first dance. It starts off beautifully, however it soon turns into a nightmare when Sebastian accidentally ruins the dance and destroys Melody's birthday cake. Melody checks to see if Sebastian is alright, but soon everyone at the party starts to laugh at her for talking to a crab. Louie then notices Sebastian and, remembering him from their last encounter, a chase ensures. Humiliated, Melody runs out of the ballroom. In her bedroom, Melody is in tears over what happened while Ariel comes in to comfort her daughter, Melody picks up the necklace and sees her name on the locket. Furious, Ariel confronts Melody and learns that she has been sneaking out into the ocean without her permission. Melody tries to learn why she isn't allowed into the sea and asks about the locket. Ariel however doesn't answer Melody's questions, forbids her from going into the sea and warns her that the sea is dangerous. Angry at her mother's refusal to answer her questions, Melody runs out of her bedroom, but not before she takes back her necklace.
Eric then soon arrives and sees Melody run off. Ariel feels awful as she has now made things worse, Eric comforts Ariel and tells her that it's time that Melody finally learned the truth. Realizing that Eric is right, Ariel agrees and they both go and search for her. However, upset with her mother and seeing that she won't get answers by staying home, Melody takes a boat and sails away, despite Sebastian's protests. Sebastian then soon returns to the castle and informs Ariel and Eric that Melody is gone.
Melody is lured to Morgana's lair by her manta rays; Morgana acts courteously to Melody and explains that the locket shows her heritage and she can help her become part of it. Undertow believes that Morgana is lying again, but finds that she has a bottle of Ursula's magic. A drop from the bottle lands on Melody's foot and she is lifted into the air in a green vortex that transforms her into a mermaid, filling her with joy. Melody jumps into the water and begins swimming around to her heart's delight. Undertow gets angry with Morgana for not using the potion to change him back, but Morgana tells him she's still reeling Melody into her plot.
Later in the ocean, Ariel and Eric talk with Triton over the situation. He assures them that he has sent search parties all over the ocean to find Melody and informs them that he will soon be join them. Eric thinks that it's best that Ariel goes with them that he needs to stay to lead the search on land as she knows both Melody and the sea better than anyone and Ariel agrees with Eric and having finally realized that she shouldn't have kept Melody from the sea, because it's a part of her and part of herself. Triton uses his trident and transforms Ariel back into a mermaid to search for Melody.
Once Melody has calmed down and thanks Morgana for fulfilling her dream, Morgana fakes crying and explains that the spell will only last a few days. The transformation can be made permanent if Melody can get hold of the trident, which she claims was stolen by Triton. However, unbeknownst to Melody, Morgana only wants the trident to make up for her own lack of magical talent and that the trident can only be removed from its resting place by Triton or a member of his family.
She gets a stone map from Morgana and leaves, singing about her situation. Soon, she accidentally crashes into ice and breaks the map, losing any clue how to get to Atlantica. However, she soon meets Tip the penguin and Dash the walrus, who seek to become heroes. She tells them that she needs to get to Atlantica and retrieve the Trident or she'll change back into a human. Tip is untrusting of her, but Dash convinces him to help out Melody as she is depressed by becoming human again. They begin singing and swimming away, bonding with each other.
They eventually get to Atlantica, where Melody temporarily loses sight of Tip and Dash. She then meets three mer-teens, who want to befriend her. Melody accidentally introduces herself as "Mel-mel" due to stuttering from being attracted to the blonde mer-boy. Dash and Tip find Melody and pull her away, putting her back on track. They sneak into the throne room, where she sees Triton, unaware he is looking at Melody's baby photo. Triton then leaves, ordering his men to double their efforts to find her. Melody quickly takes the trident and leaves with Tip and Dash, accidentally losing her locket. Unbeknownst to Melody, her mother has just arrived and enters the throne room with Triton, where they see the trident is gone and her locket is on the ground. Ariel is confused as to how Melody could have gotten there, but they focus on finding her as she may cause trouble with the trident.
Melody successfully returns to Morgana with the trident, but as she is about to hand it over to her, she is stopped by Ariel and they are both shocked finding each other in their mermaid forms. After greeting Ariel and Flounder, Morgana tries asking Melody for the trident again, but Melody is still in shock over learning Ariel's secret and is deeply upset that she never told her. Morgana, trying to keep Melody's favor, agrees with her and "scolds" Ariel for keeping her origins hidden from her daughter. Ariel tries asking Melody to give her the trident, but Morgana begins convincing Melody to give it to her instead, reminding Melody that she gave her everything she desired, while Ariel has only lied to her for her entire life. Ariel tries defending herself for her actions, stating she was only trying to protect her, but Melody sees that all Ariel has ever done was only keeping her from the sea and again asks why she never told her the truth.
Ariel tries to apologize, even admitting that if she could change one thing in her life, it would be her decision of keeping the truth hidden from Melody. However, Melody deeply hurt and feeling betrayed, refuses to forgive her mother and gives the trident to Morgana. With the trident in her grip, Morgana reveals her true intentions. She grabs Melody and put her behind a wall of ice. She calmly mentions that the spell will wear off by sundown. Morgana uses the trident's magic to lord over the ocean, rising to the surface to gloat. Scuttle, Triton, Sebastian, and Eric arrive, and a battle ensues against Morgana and her minions. Ariel rescues Eric from almost drowning while Sebastian clamps his claws down on the tails of Cloak and Dagger, mirroring what happened with Flotsam and Jetsam.
Soon after the sunset, Morgana's spell wears off, and Melody returns to human form. Because she is no longer a mermaid, she begins to drown. Melody is freed with the help of Tip and Dash and an unlucky Undertow. Morgana uses the trident and puts every sea creature under her spell, forcing Ariel, Sebastian, Flounder, King Triton, Tip, and Dash to bow, but before Morgana is about to revive Ursula and Flotsam and Jetsam with the trident, Melody looks down and sees her feet, and realizes that, as she has reverted back to a human, she is able to escape the spell. She manages to grab the trident and throw it back to Triton by climbing up the cliff on which Morgana is standing and sneaking up on her. When Melody does so, Morgana tries to get the trident back, and throws her off the cliff. Just as Melody fears she is facing death, Dash takes action and goes to Melody's falling point; Melody lands on him safely, surviving the fall. Now having had his trident returned to him, Triton confronts Morgana and, saying that Morgana and her spells will not threaten Triton's family ever again, uses it to encase her in a block of ice, which sinks underwater with a picture of Ursula from her kingdom and the icicles began to collapse, trapping Morgana inside.
Having regained consciousness, Melody finds herself in her father's arms and reunites with her family. She then begins to apologize to Ariel, but Ariel says that she and Eric are the ones who are truly sorry, as they realized they should've told her the truth instead of keeping it from her. Melody explains she never meant to hurt anyone, but believed she would be better as a mermaid than a girl. However, Ariel assures her daughter that it doesn't matter whether she has fins or feet, as she and Eric love Melody for who she is, their "brave little girl".
King Triton then appears where he and Melody officially meet each other; he offers his granddaughter the option of becoming a mermaid permanently and living with him in Atlantica or living with her parents on land. After looking at her parents (with Ariel giving her a knowing smile), Melody says she has a better idea.
The next day, she uses the trident to disintegrate the wall separating her home from the sea and everyone from Atlantica comes to the surface to swim with the locals from the village. Melody bumps into the mer-boy she met before, and shyly says "hi" to him. The humans and merfolk and sea creatures unite in a circle around King Triton, Sebastian, Flounder, Scuttle, Tip, Dash, Ariel, Eric and Melody. Then King Triton uses his trident's magic to form a rainbow in the sky. As the scene come to a close at the end of the song, Melody giggles.
- Jodi Benson as Ariel
- Samuel E. Wright as Sebastian
- Tara Charendoff as Melody
- Pat Carroll as Morgana
- Buddy Hackett as Scuttle
- Kenneth Mars as King Triton
- Max Casella as Tip
- Stephen Furst as Dash
- Rob Paulsen as Prince Eric
- Clancy Brown as Undertow
- Cam Clarke as Flounder
- Rene Auberjonois as Chef Louis
- Kay E. Kuter as Grimsby
- Edie McClurg as Carlotta
- Frank Welker as Max
- Justin Schulte as Alex/Handsome Boy/Boy #2
- Blake Ewing as Boy #1
- Emily Hart as Mergirl #1
- Marcus Toji as Merboy #2
- Dee Bradley Baker as Cloak and Dagger
- Rodger Bumpass as Penguin #3
- Tress MacNeille as Mother Penguin and Baby Penguin
- Diane Michelle as Girl #1
- Will Ryan as The Seahorse Herald
The film was released direct-to-DVD on September 19, 2000. On November 6, 2006, the film was released in a bundle together with the original film in the Region 2 release. The original DVD release was later discontinued and a special edition DVD with a deleted song, "Gonna Get My Wish," and a new game was released on December 16, 2008. Also, it was released as part of the The Little Mermaid trilogy, which includes all three Little Mermaid films, was released on the same day. The film was released on Blu-ray in a 2-Movie Collection with The Little Mermaid: Ariel's Beginning on November 19, 2013.
The film's official soundtrack was released on September 19, 2000. The track list is as follows:
- During the song, "Down to the Sea", an edit was made for future releases of The Little Mermaid II. In the first release Adella and Aquata are both designed similarly to their TV series counterparts, yet in a future release they were both altered to resemble their prequel movie versions.
- Similarly, Ariel's transformation had a slight edit in future releases. In the first release, she was slightly pudgy, similar to some animations of Adella. In the re-releases, she looked exactly as she did in the first film.
- While Sebastian sings "Here on the Land and Sea", one of the lyrics is "fun and fancy free", which is the title of Fun and Fancy Free.
- Tip and Dash are inspired by Timon and Pumbaa from The Lion King.
- Tip is even voiced by the actor that originated Timon in the Broadway cast.
- "Down to the Sea" is similar to "Part of Your World".
- The late Kay E. Kuter who voiced Grimsby in the TV series was chosen to take on the role in the sequel film as well replacing the late Ben Wright who passed away before the first film made it to theaters.
- Jason Marin who voiced Flounder was not in the sequel, instead Cam Clarke took over the role as an older voice of older Flounder.
- Alana and Arista did not make an appearance at Melody's christening.
- The song "Gonna Get My Wish", sung by Pat Carroll who is the voice of Ursula and Morgana and Clancy Brown as Undertow, is on the special edition of this film.
- The unpopularity of this sequel and Cinderella II: Dreams Come True, were cited by John Lasseter as examples of why they should discontinue the Disney Sequel brand.
- Ironically, Return to the Sea had recently been voted the best Disney Sequel in an official poll.
- Ariel should've explained everything to Melody before or moved somewhere away from the ocean, which she points out a few times.
- During the prologue, Ariel's ponytail appears at different lengths at different times.