They say love knows no bounds, and for Ponyo and Sosuke it must be true. A fish girl, the daughter of the great sea spirit Granmammare, and a five year old boy who lives by the sea have nothing in common, do they? But love finds a way, and Ponyo and Sosuke find happiness. Ponyo gives up her magic for Sosuke, becomes a human girl so they can be together. Little does she know that if Sosuke falls out of love with her she'll turn into sea foam. But Sosuke seems to have no intention of giving his love to anyone but Ponyo as they grow up, spending nearly their entire lives side by side.

They go to the same schools, take the same classes, play out in the sea together, but never do they tire of each others company. As the years pass, however, and he two enter in secondary school at the ages of thirteen, jealousy flies behind their backs and rumors are spread like wild fire. Ponyo and Sosuke live in the same house they say, You know what that means! Striking young Sosuke and lovely Ponyo live on in ignorance.

The truth is, everyone is jealous of Sosuke and Ponyo's perfect love. They don't know that if Sosuke relinquishes that love Ponyo would be gone forever either. It seems that no one knows. Well, apart from Fujimoto, who still visits to check in on his daughter occasionally. He worries all the time that Sosuke will turn his darling daughter into sea foam, no matter how much Granmammare reassures him that all will be alright. Finally Fujimoto cracks and decides to take a job as the swimming coach at the high school in disguise. He leaves the running of the ocean to his daughters, who are all grown up now, nearly as beautiful as their mother and Ponyo.

Secondary school brings new troubles for Ponyo and Sosuke, from the cruel rumors and Fujimoto's eccentric spying to Sosuke troubled feelings and Ponyo's new human experiences. And there is an unexpected danger lurking the halls, one that could mean the end for Ponyo and Sosuke too!