It's the night of the Magical Mer-Moon, and Cap'n Turbot and Francois race out in their diving bell to capture images of the fabled mer-pups! But when a sea slug decides their diving bell is a great place for a nap, it's the mer-pups who send for help, turning Marshall into a mer-pup! Ryder and the PAW Patrol dive into action to save the Cap'n and Francois, and get Marshall back to dry land before he turns back into a pup!
It is early evening in Adventure Bay, and as the full moon rises into the evening sky as the sun sets, on Seal Island, Cap'n Turbot is carrying his cousin, Francois, down to the diving bell because the Cap'n realizes that with the full moon out tonight, the mer-pups will be making another appearance, and he wants to get proof of their existence this time. Once underwater, their efforts to find the mer-pups quickly fall apart when Francois tries to get his camera off where it is hung up on the diving bell door, yanking it open and causing the diving bell to begin to flood. Though the two cousins manage to close the door and avoid drowning, Cap'n Turbot loses his jar of squid jerky in the process, which soon draws the attention of the giant sea slug, who munches down the tasty treats, but in the process, weighs down and pins the diving bell deep underwater, with the Turbots unable to call for help. Luckily, the mama mer-pup and her baby mer-pup see the Turbots are in trouble and surface to begin singing for help.
At the Lookout, Marshall is awoken by the mer-pups and goes to investigate. When he reaches the beach, the Mama mer-pup surfaces to see him, and though Marshall recognizes her, she drags him underwater by his collar, and then touches noses with him, transforming him into a mer-pup. Marshall is excited by the prospect of being a mer-pup himself now, but does not realize at first that the Mama Mer-pup made him a mer-pup to help the Turbots. Skye is soon woken up by the mer-pups and contacts Ryder to let him know of Marshall not being in his pup house. Ryder checks for Marshall's location on the Lookout screen using Marshall's pup-tag's tracking beacon, and finding it out in the bay, calls Marshall to check on him, and is stunned to see Marshall is a mer-pup and is with the Mama and Baby Mer-pups before he loses contact as Marshall goes too deep for his pup-tag to send a signal back to the pup-pad. Worried, Ryder summons the rest of the pups. When they notice Marshall gone, they think they can get into the elevator without crashing, but Rubble slips on one of the pups' toys. Nonetheless, Chase thanks him for filling in for Marshall with the inevitable elevator crash.
Once topside, Ryder explains that the mer-pups have returned, and they need to find Marshall before the full moon sets and he returns to his normal Dalmatian self. Selecting Zuma for his submarine and Rocky for his tugboat, Ryder and the pups set off to help Marshall.
Once over where Marshall's signal was last detected, Ryder and Zuma dive, and soon find him with the mer-pups, who then take them to where the Turbots are trapped under the sea slug. After Marshall and the mer-pups are able to wake up the sea slug and lure her off the diving bell, which gives Francois plenty of time to take photos of the mer-pups, it is soon discovered that Rocky can't hook his tugboat's winch up to the diving bell as the handle is broken and the hook would slip right off. Realizing they need Rocky down here to repair it, the Mama Mer-pup goes up to drag Rocky into the water and then turn him into a mer-pup again. Rocky is ecstatic at being a mer-pup again, before he's reminded that they need him for the repairs to the diving bell. With a little help from the Mama and Baby Mer-pups, Rocky repairs the diving bell, and it is able to be hooked up and brought back to the surface.
Once back topside, Ryder thanks the mer-pups for all their help, and if they ever need help again, they just have to sing for help. Afterwards, Skye asks if they can spend some time with the mer-pups and play with them, and Ryder agrees. With that, Skye willingly enters the water, and has the Mama Mer-pup turn her into a mer-pup again. Together, Marshall, Skye, and Rocky enjoy some time as mer-pups with the Mama and Baby Mer-pups.
The next day, with Skye, Marshall, and Rocky back to their normal pup selves, the Turbots arrive at the Lookout to show their footage of the mer-pups to the PAW Patrol, but unfortunately, Francois forgot to take off the lens cap of the camera, so there is no video, just audio. While the Turbots argue over who's to blame, Ryder and the pups share a good laugh over how it seems the secret of the mer-pups is safe once more for the time being.