Playboy business tycoon Liu Xuan (刘轩, played by Deng Chao) purchases the Green Gulf, a wildlife reserve, for a sea reclamation project, and uses sonar technology to get rid of the sea life in the area. Unknown to him, the Green Gulf is the home of merpeople, and the sonar has caused many of them to die or get sick. The few survivors live in an abandoned shipwreck in the gulf, and want to assassinate Xuan for his deeds. The merfolk send Shan (珊, played by Lin Yun), a beautiful mermaid who is trained to walk on her fins and hide among humans, in a "honeytrap" plot against Xuan. On the night of Xuan's party celebrating his success, Shan, pretending to be a dancer, gives her telephone number to Xuan.
Xuan, believing that Shan is a prostitute, calls her number in order to make his business partner jealous. Shan goes to Xuan and tries to kill him but her attempts keep backfiring. In the end, Xuan decides to send Shan back home, and along the way Shan takes him to a funfair that she works at. While there, Shan tries to show Xuan there are more important things than money, and Xuan is impressed with Shan's simple, funny antics. They spend the day together and develop feelings for each other. When Xuan finally takes Shan home, Shan quickly sends Xuan away before her people can kill him. The next day, Xuan takes Shan for another date and proposes, but Shan rejects him.
That night, Xuan goes to Shan's house to talk to her, and discovers the truth that she and her family are merpeople. Against Shan's wishes, the others capture Xuan and tell him how he's killing them with his development project. Xuan is about to be killed when Shan helps him escape. Xuan returns home and, after the shock has worn off, decides to investigate the effects of his project. He turns off the sonar but mistakenly tells his business partner that Shan is a mermaid and where the other merpeople live. The merpeople are attacked, and many of them are killed. Xuan arrives in time to save Shan before she's killed, and sends her back into the ocean so she can escape.
Three years later, a student arrives at Xuan's home to thank him for setting up a scholarship for research into environmental protection. The student asks Xuan whether merpeople are real and the story that he fell in love with a mermaid is true, but Xuan denies it. Xuan then introduces the student to his wife "Lucy", who is actually Shan.