During a sea voyage, the Poet remembers the wedding of Edvard to Henriette, mourning the separation from his dear friend. A tear rolls slowly down his cheek falling into a sea of memories and fantasies.
At the bottom of the sea, the Poet's longing for Edvard takes the form of a little Mermaid. This creature, this lovely sea being is watching a ship passing on the surface, dreaming of the earth world. On board the passing ship sailors are exercising. Their Captain, a Prince - strongly resembling Edvard - is absurdly playing golf and having hit the ball over board, he dives into the sea to retrieve it. Although he cannot see the mermaid, her aura envelops him agreeably. With the appearance of the Sea Witch, a terrible storm erupts. The Prince would have drowned but the Poet wills the little Mermaid to rescue him. Holding his unconscious body, the Mermaid whose frolicsome play has now turned to love, cannot resist but kiss him.
The sound of bells. A group of convent school girls arrives at the seashore. One of them, a Princess - looking very much like Henriette - discovers the Prince. She tentatively wakes him. Believing the Princess to be his saviour, the Prince seems to fall in love with her.
Sad and despondent the little Mermaid witnesses the developing affection between the Prince and Princess, and mirroring the Poet's soul, her desire for the Prince turns to desperation.
Determined to become human, the little Mermaid, searches for the Sea Witch. Love gives the little Mermaid courage to beg for a human body. A terrible ritual follows, and taking her beautiful tail as ransom, the witch violently transforms her. The little Mermaid has legs…
Waking naked on the seashore, she finds her first steps unbearably painful. The Prince, passing by, takes pity on this strange creature and carries her on board his ship. It seems her dream has been realized.
As the ship is about to depart, the Prince discovers the Princess among the passengers. As the love between the Prince and Princess intensifies, the little Mermaid suffers the intense pain of human disappointment.
The little Mermaid is determined to be a woman, but the closed rooms of the earth world stifle her attempts. In spite of her efforts, she is still awkward and clumsy in her human body. Visions of the sea cross her dreams…
Deeply in love with the Prince, the little Mermaid's desire to be loved in return is now clearly in vain - today he will marry the Princess. She is to be a bridesmaid. During the celebrations the Sea witch appears as part of a strange entertainment. He gives her a lethal knife promising that if she kills the Prince, her tail will be restored and she may return to her home in the deep. After all the guests have departed, the little Mermaid encounters the Prince. It is clear, however, that she cannot, could never harm him. During their farewell, does he feel, just for a moment, the depth of her passion? Did they nearly kiss? Abruptly the Prince departs for his wedding night with the Princess.
The little Mermaid is left alone. Her pain reflects the Poet's own painful situation. Each seems the shadow of the other - each abandoned by the object of their intense love. They are one - creator and creation. It is the Poet's love for his Mermaid that gives her the soul that will make her immortal, just as she, "The Little Mermaid", will immortalize him. Courageous, they search for a new world.