A goldfish named Ponyo lives with her sorcerer father, Fujimoto, beneath the ocean. One day, she ventures to the surface and befriends a five-year-old boy named Sōsuke, who names her and promises to protect her. Ponyo's curiosity about the human world transforms her into a human girl, which triggers miraculous and alarming occurrences. Her transformation, however, disrupts the balance of nature, causing the moon to draw closer to Earth and spawning massive tidal waves.

As Sōsuke and his mother, Lisa, attempt to keep themselves and their townspeople safe amidst the floods, Fujimoto seeks to bring Ponyo back to the ocean to restore balance. The two children’s bond and Ponyo's desire to remain human challenge the natural order, leading to a confrontation that determines the fate of both the human world and the underwater realm. The film explores themes of friendship, love, and the impact of one's actions on the environment.