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The focus of the story's action is upon two schoolgirls, Hailey and Claire, who have lived as neighbours for many years. For the majority of those years, their favorite place for amusement has been the Capri Beach Club; a seaside resort consisting of a swimming pool, sunbathing areas, a snack shop, and a playground.
At the beginning of the book, the Capri Beach Club has become ruinous via neglect by its staff. The increasingly uncomfortable conditions of the Club have persuaded many of its visitors as well as its lifeguards to abandon it. Of its staff, only Raymond, the snack shop's operator, remains. Of the visitors, only Hailey and Claire continue to come. As a result of this degeneration, the Club is condemned to be destroyed.
Because the two girls are intimate friends, they are afraid to lose the intimacy. This fear becomes prominent when Claire's grandparents, with whom she lives, decide to leave the area and move their residence to Florida, where they are safe from such accidents as occur as a consequence of icy winters. Hailey is dismayed to hear of this, and so refuses even to speak of it. Both of them spend many hours trying to make their last days together as long as possible, by the various means of avoiding all chronometric devices, playing for hours at the disintegrating Capri Beach Club, and staying together in as much as they can afford to do so. Both are confounded and frightened by the future: Hailey, because she has no control by which to change it; and Claire, because it is a problem she cannot answer.
One day, a violent thunderstorm occurs in their vicinity. As a result of this storm, a large quantity of debris is deposited in the Capri Beach Club. When Hailey and Claire come to investigate and lament, they discover in the swimming pool seaweed, moon jellies, barnacles, and (surprisingly) a mermaid. This last, a spoiled young creature named Aquamarine, becomes central to the plot.
During the next morning, Hailey and Claire visit the pool again. They place marinated herring into the water, to feed the mermaid and possibly catch a glimpse. Although Aquamarine does not initially appear, she surfaces later, being stimulated to do so by the presence of the handsome Raymond. During the night, Aquamarine has undergone mild hardships; she has eaten very little, has been separated from her six sisters, and also is suffering damage from the chlorine present in the swimming pool.
Hailey and Claire advise Aquamarine to return to the ocean, however she refuses, because of her new attachment to Raymond. When Hailey and Claire attempt to persuade her otherwise, she calls them "jealous" and refuses to obey.
Upon returning to the house wherein Claire has hitherto lived, she and Hailey read books that contain information pertaining to marine life-forms, trying to find an answer to Aquamarine's troubling conditions. They find nothing useful until some hours later, when Hailey discovers an encyclopedia of mythological creatures. From this, they learn that mermaids cannot survive on land for more than a week. The necessity of returning Aquamarine to the ocean is, by this discovery, made more urgent.
In order to persuade Aquamarine to return to her home, Hailey and Claire arrange that she will meet with Raymond and spend one evening with him, after which she must leave. Despite her protests, they insist, arguing that she, without her namesake seawater, will gradually perish. To compensate for her nudity and lack of legs, they plan to dress her in a long blue gown which Claire adorns with the abandoned shells of various organisms and to place her in a wheeled chair.
Before the meeting occurs, the two girls confide their story in Claire's grandfather, Maury, so that he will expect that their return will be late in the evening. He believes their story to be true, because of his own previous encounter with a mermaid. He takes them to the Capri Beach Club, where they organize the table at which their friends will sit and the food that their friends will eat. They then lift Aquamarine out of the pool – an operation wherein Claire must overcome a hesitation to enter water – dress her, place her in the wheelchair, and introduce her to Raymond. To explain her acquaintance with them, they present her as a distant cousin, related to them by both marriage and divorce.
Raymond is awestruck by the sight of Aquamarine, with whom he spends the evening happily. Claire and Hailey, some distance away, begin to embrace their future. At nine o'clock, they take Aquamarine to the swimming pool. As she leaves, Aquamarine gives Raymond a seashell, by which to contact her by speaking her name into it. By her own account, she will hear this call regardless of their relative positions.
Hailey and Claire sleep together in the house Claire will soon vacate, which has been made empty of furniture. They have grown very fond of Aquamarine, and she of them. They have also begun to generate hope, by which they are able to fear less the experiences they will meet after Claire's departure.
During the next morning, the owner of the Capri Beach Club comes to the Club, inviting many people to join in a festival. Hailey and Claire, annoyed, come to take Aquamarine back to the ocean. They meet Raymond, who is caused to regret that he cannot bid Aquamarine farewell before he leaves for Florida to take a new position. While they speak and listen to Raymond, a boy called Arthur falls into the swimming pool, having wandered away from his parents and been intrigued by Aquamarine. Aquamarine rescues him, with the help of Raymond. Raymond, seeing her tail and thus seeing her as a mermaid, is more astonished than ever. This discovery does nothing to impair his adoration of her.
Raymond delivers Arthur to his parents, while Hailey and Claire carry Aquamarine to the ocean. They carry her "beyond the breaking waves" and cast her into the water, where she is restored to full health and strength. They promise never to forget her, then return to the Capri Beach Club and thank its owner for "the best summer of their lives".
Later, Claire and her grandparents move to Florida. After her departure, the Capri Beach Club is dismembered. Hailey does not send news of this, wishing that Claire retain her memory of the Capri Beach Club as it had formerly been. In Florida, Claire learns to swim. On one swimming excursion, she encounters Raymond, who has come to live nearby. From him, she learns that Aquamarine is in the vicinity. Claire thinks to take a photograph of the mermaid, but defers, on the grounds that Hailey will soon come to visit. The book ends with the statement that "far beyond the tide pools and the jellyfish, beyond starfish and snails, [Aquamarine] is swimming there still."
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