Allen Bauer is rescued by a mermaid after falling in to the sea as a young boy. Later in life he falls in to the sea again and is rescued by the mermaid again.
This time the mermaid takes a shine to Allen and decides to sprout some legs and follow him around New York. Naked.
Anyway, Allen falls in love with her, but she feels like a fish out of water and starts wilting and the film ends up with Allen jumping in to the water again and being saved a third time by the mermaid.
If memory serves me correctly the mermaid takes Allen in to her world under the water and they all live happily ever after.