As we all know Jiraiya dropped into the sea and lethally wounded, wrote his last message on the toad's back. Then he was drifted away and sunk to the bottom of the sea, dying. Now WHAT IF before he died, something unexpected happened to him?

There was still a sparkle of life in Jiraiya when he drifted slowly through the water into the deep. His last thought was joy about his pupil Naruto and the prophecy which let him hope that the Ninja world would eventually become changed to the better. Then his mind faded into darkness. Not completely gone yet, but on the edge of dying, he wasn't aware of the dark shadow lurking behind a shelf and watching him with predatory interest. Suddenly the mysterious shadow dashed forward and snatched his lifeless body drawing him to a dark underwater cave and storing him there.

The shadow finally turned out to be a mermaid, who revived him with her special powers, enabling him to live underwater. But surviving by the touch of a mermaid has a terrible price. Once awoken the saved one looks into her eyes and loses his memory forever. From that moment on he's bound to her, condemned to live at her side while she's feeding on his soul. Mermaids use to have a lot of mortals kept down underwater like a livestock.

But since Jiraiya wasn't a usual mortal, he managed to keep a tiny bit of his memory stored in the back of his mind, waiting to be awakened some time. The mermaid however took a fancy to him since he was special. His soul tasted like none she had tasted before. So she kept him alive for many years, far beyond any time she ever did, while he wasn't knowing who he was or where he came from.
Keeping a mortal alive for so long was new to the mermaid. Jiraiya needed food and attendance, but mermaids hate extra work, they spare as much energy as they can since their preferred food, human souls, is rare to catch. So one day she decided to restore Jiraiya's arm in order to make him able to provide for himself and become a help to her. She took an arm of an octopus, transformed it by her magic into human shape and connected it to Jiraiya's body. Thus he not just gained a new arm, but also the ability to willingly change it into a mighty octopus tentacle, snatching his prey underwater and holding it in a deadly grip.

Becoming useful like that, Jiraiya was allowed to freely roam around underwater instead of being stored into a cave with the mermaid's other prey. She was greedy for his essence, so she wanted him to be at her side whenever the time was ripe to harvest on him again. Obeying his eerie mistress was Jiraiya's sole purpose of life and being fed to her made him happy beyond belief. Though her real shape was gruesome, the mermaid's illusion powers made her face and upper body appear to Jiraiya as the most beautiful woman he had ever seen.

So this could have gone on forever if not a ship broke and brought fresh souls to the sea. All the mermaids assembled in greed to take what they could and Jiraiya was still kept around his mistress to help her getting the most booty. He didn't really mind until he realized a toad in a cage which pledged him desperately to help. He didn't know why, but he fetched the toad and dived with it up to the surface, something he never had done before. As soon as he touched the air, the spell of the mermaid was broken and his memory revived. Eventually the mermaid noticed his absence and came for him but Jiraiya closed his eyes and, led by the toad, killed the mermaid. Finally he was free. He took a look around and asked the toad: "Do you have any idea how we get on land now? No?"

Whatever, he managed it finally and returned to Konoha where he found his former pupil Naruto as the new Hokage. Naruto was overwhelmed to see his mentor alive and asked him to stay as an advisor at the round of the elders. Jiraiya first refused, but then he found out that all the elders were attractive women of the age and appearance of Kurenai.
"What happened to the other elders?" he asked.
"Well", Naruto scratched his head, "Sasuke sort of... took care of them."
Jiraiya still staring at the 'elders' said with a dumb grin:
"Whatever, let me thank him later! I'm baaaaack" and he grabbed for the waists of two women at once.