The film begins with a fantastic image of a whole apartment underwater with a woman—our protagonist Elisa—floating above a couch, asleep. She awakens to a dry apartment and begins her morning route, or rather, her late-night routine. She clocks into her job at a military facility right at the stroke of midnight, thanks to the help of her friend Zelda who helps Elisa cut the line of other workers clocking in. We quickly learn that Elisa is mute and communicates solely through sign language.
During their cleaning shift, something is being brought into a lab in the facility in a large steel and glass container filled with water. Elisa places her hand on the object, and a humanoid hand jolts up to smack the other side of the glass. We are introduced then to Strickland, who is in charge of this "asset." Soon after, Elisa and Zelda encounter Strickland while they're cleaning the men's room, and he makes them stay while he relieves himself and talks about his cattle prod.
We meet the creature when a curious Elisa returns to take a look at it. It's a strange, amphibious, human-like thing. She starts to gain its trust by bringing it eggs, and as their bond develops, she plays it music and teaches it simple sign language. They soon start to develop a kind of relationship, and the head scientist investigating the creature, Dr. Hoffstetler, sees that she is able to communicate with the creature. The scientist creeps in the dark as he watches Elisa conduct this budding relationship in secret, but Hoffstetler has secrets too. We soon learn that Hoffstetler is in fact a Soviet agent named Dimitri. But in his first conversation to his Soviet superiors, Hoffstetler stresses that he's interested in the well-being of this odd, intelligent creature.
At the lab, Strickland shows off the creature to his superior, General Hoyt, and requests permission to vivisect the creature, which would kill it. To Hoffstetler's protests, General Hoyt grants Strickland's request. When Elisa learns of Strickland's plans, she tries to enlist her neighbor, Giles, to help free the creature. Giles is a lonely gay artist, and after showing some resistance initially—and getting rejected by a pie shop clerk he has a crush on—Giles decides to help Elisa. He forges documents to make it look like he works for a laundry company, and they break the creature out of the facility with some last-minute help from Hoffstetler, who kills a security guard.
Elisa takes the creature to her apartment, where it will live in her bathtub until the next rainstorm fills the canal enough to set the creature free into it. This is not an easy transition for the creature, who breaks into Giles's apartment to eat his cat, but both Elisa and Giles show the creature love and get attached to it. For Elisa, this means developing a sexual relationship with the creature, culminating in a fantastical scene when she fills her entire bathroom with water from floor to ceiling, so she and the creature can freely make love.
After Strickland bumbles through an investigation into the creature's disappearance, General Hoyt gives Strickland an ultimatum that if he does not retrieve the creature in 36 hours, then Strickland will be disappeared and enter a life of misery. So Strickland sets out on a rampage, furiously shaking down anyone for information that he possibly can. He hunts down Hoffstetler, and finds him right in the middle of the Soviets' attempt to kill Hoffstetler. Instead, Strickland kills the Soviets and tortures Hoffstetler into revealing the identities of the people who stole the creature: two cleaning women.
Strickland goes to Zelda's home and threatens Zelda and her husband, and Zelda's husband ultimately spills the beans to Strickland. He tells Strickland that Elisa has the creature, which leads Strickland to break into Elisa's department, where he finds a note about Elisa taking the creature to the canal. Strickland finds Elisa and Giles just as they are attempting to set the creature free. He shoots both Elisa and the creature, and it seems like that's the end of that. But the creature heals itself, and then slashes Strickland's neck, killing him. The creature takes Elisa with him into the canal, where he revives her and gives her the ability to breathe underwater. They embrace, for they are to live happily ever after.
