It is evening on Adventure Beach, and Chase is seeing off the last of the beach-goers as they head home for the night before declaring the beach closed. It turns out to be for a good reason: The full moon of the Magical Mer-Moon has begun to rise on the horizon, meaning that the mer-pups are returning, and all the pups are excited for it, especially Chase and Rubble as both of them have not had the experience of being mer-pups themselves yet and want to be this time around. Rocky shows his full support as well since being a mer-pup means he doesn't have to worry about getting wet when he can enjoy it with a fish tail. They are soon joined by Cap'n Turbot, who is hoping to get lots of pictures of the mer-pups this time, especially without getting his thumb in the way of the shots, and to get a few shots of the mer-pups' home of Puplantis.
However, as they are excited for the mer-pups, they notice a strange sailed ship coming towards the beach. Ryder assigns Chase to return to the Sea Patrol HQ to guide the ship into port while he and the rest of the pups join the Captain on the Flounder to watch for the mer-pups farther out into the water.
They are unaware that the ship belongs to Sid Swashbuckle the Pirate and his loyal first mate pup Arrby, who are there to collect more stuff for Sid's treasure hoard, despite how he has so many of some things as it is, such as life rings, televisions, cameras, and more.
Finally, the pups hear the singing of the mer-pups, and are soon reunited with the Mama mer-pup and the Baby mer-pup. After Marshall falls overboard, the rest of the pups follow his lead, even Rocky, and the Mama and Baby mer-pups transform them into mer-pups themselves, allowing Rubble a chance to experience it for the first time like he wanted. Soon, the mer-pups reveal a large pearl that they offer to share with the pups and play with, but no one realizes that Sid sees it and assigns Arrby to retrieve it for him.
Soon after, the mer-pups want the pups to follow them underwater to show them something. Ryder and Cap'n Turbot put on scuba gear to join them, with Ryder putting on his Sea Patrol scuba suit to follow. However, once underwater, the pearl ends up in some seaweed when the pups play with it some more, and when Rubble goes to retrieve it, he encounters Arrby, who attempts to escape with the pearl, but gets his hind foot stuck between some rocks. Ryder helps free him, and Arrby, not wanting to reveal his true intentions to them, agrees to join them as they head for Puplantis.
When they reach Puplantis, Ryder, the pups, and the Captain are amazed by how beautiful it looks. It is then they are shown the source of Puplantis' magic, a clam that continuously spawns new pearls to replace the old ones as they fade from their magic running out. When Arrby shows it to Sid via his helmet camera, Sid wants the clam instead, and transforms his ship into a submarine to head underwater to retrieve it. At the same time, Chase notices all this from the Sea Patrol HQ when he tried to help guide Sid's ship in, and notifies Ryder. Ryder replies that he will keep a lookout for it.
Back in Puplantis, as Sid arrives, he uses an inflatable decoy of an octopus to draw attention away from the castle so he can steal the clam. However, as he makes his escape, he's seen by Ryder, but before they can pursue him, the mer-pups point out that without the clam and fresh pearls, Puplantis is losing its magic and is starting to collapse. With the situation severe, Ryder orders the pups back to the Sea Patrol HQ at once. As Skye, Zuma, Marshall, Rocky, and Rubble head back for the beach, the Mama and Baby mer-pups reverse their transformations and return them to normal. Once inside, Ryder briefs the pups on their mission, assigns Rubble and Rocky to aid in keeping Puplantis from collapsing further. He also assigns Cap'n Turbot to help them communicate with the mer-pups. Once Robo-Dog loads the Sea Patroller with Rubble's underwater construction rig and Rocky's repair submersible, the ship sets sail into the full moon lit night with guidance from the mer-pups to reach Puplantis.
With Cap'n Turbot having remained in Puplantis to watch the effort to keep the city from collapsing, he's able to coordinate Rocky and Rubble with repairs while Ryder and the other pups hunt down Sid and Arrby. As for Sid and Arrby, the clam is spawning so many pearls that the weight of them is slowing down their sub, threatening to sink it, but Sid is not concerned as long as he has his loot.
Once they locate Sid's sub, Ryder takes Skye, Zuma, and Marshall with him in the Sub Patroller while Chase remains on the Sea Patroller with Robo-Dog to keep an eye out if Sid resurfaces and changes his sub back into ship mode. They are soon joined by the Mama mer-pup to help find the clam while the Baby mer-pup remains in Puplantis with the other mer-pups to help Cap'n Turbot, Rocky, and Rubble.
When they find Sid's sub, he attempts to lose them, but with his speed greatly hampered by the added weight from the pearls, he surfaces to hide in a cove, only for him to bump the sub against the rocks and alert Chase and Robo-Dog, who soon light him up with the Sea Patroller's searchlight. However, the sub soon sinks from being too heavy with cargo, and Arrby and Sid call Ryder, requesting his help to rescue them. Ryder frees Sid's sub, but when the Sub Patroller gets snagged on some rocks and Ryder can't free it, Sid takes advantage and attempts to escape once more. Knowing they can't lose him, Ryder calls Chase and requests he come underwater and use his winch to try and open the hatch on Sid's sub to dump out all his cargo. Chase, already suited up in his Sea Patrol scuba gear, is more than happy to oblige, equipping his helmet and heading down to stop Sid.
Though Chase manages to open the hatch on Sid's sub and dump out the cargo, it allowed Sid to pick up speed and pull away. As Chase wonders how he'll catch up, the Mama mer-pup helps him out by finally giving him the chance to experience being a mer-pup himself as she transforms him into one. It causes his Sea Patrol scuba gear to vanish as he no longer needs it given that he now has a fish tail. Thanks to his new mer-pup abilities, Chase is able to catch up to Sid's sub, get aboard, retrieve the clam, and escape with the Mama mer-pup to return it to Puplantis. Sid spots them escaping, and upon checking his cargo hold, is devastated to find his whole stash is gone, though Arrby cheers him up by showing he still has him.
Back in Puplantis, the city is just about ready to give way completely, but Chase and the Mama mer-pup return with the clam in the nick of time, with the Sub Patroller towing all the pearls as well. Once the clam returns to its pedestal and the pearls fill in the empty gaps in the walls where the older pearls had vanished, Puplantis' magic returns in full, and the city is magically restored to its pristine state, removing all the temporary repairs that Rubble and Rocky had provided in the meantime in the process. The mer-pups are extremely grateful to the PAW Patrol's help in saving their homes.
Some time later, the rest of the pups are turned into mer-pups again to join Chase. This time, like Chase, wearing their Sea Patrol scuba gear when they are transformed, losing the gear as it vanishes when they are given their fish tails again. Cap'n Turbot is still taking pictures when an octopus he mistakes for another of Sid's inflatable decoys grabs his camera and swims off with it, leaving him once more disheartened that he doesn't have proof that the mer-pups exist again, but leaving him knowing he can try again next full moon as the PAW Patrol mer-pups laugh before he swims back over to join them and enjoy some more time in Puplantis before heading back to Adventure Bay.