The Little Seapony named Princess Cadence dwells in an underwater kingdom with her widowed father the Seapony King, her dowager grandmother, and her sisters, each of whom had been born one year apart. When a Seapony turns fifteen, she is permitted to swim to the surface for the first time to glimpse the world above, and when the sisters become old enough, each of them visits the upper world one at a time every year. As each returns, Cadence listens longingly to their various descriptions of the world inhabited by Land Ponies.
When the Cadence's turn comes, she rises up to the surface, watches a birthday celebration being held on a ship in honor of a handsome unicorn prince named shining armor, and falls in love with him from a safe distance. A violent storm hits, sinking the boat, and Cadence saves the prince from drowning. She delivers him unconscious to the shore near a temple. Here, she waits until a young unicorn mare from the temple and her mares in waiting find him. To her dismay, the Shining armor never sees Cadence or even realizes that it was she who had originally saved his life.
Cadence becomes melancholy and asks her grandmother if humans can live forever. The grandmother explains that ponies have a much shorter lifespan than a Seapony's 300 years, but that when seaponies die, they turn to sea foam and cease to exist, while Ponies have an eternal soul that lives on in heaven. Princess Cadence, longing for the prince and an eternal soul, visits the Changeling Sea Witch in a dangerous part of the ocean. The witch willingly helps her by selling her a potion that gives her hind legs in exchange for her beautiful voice, and she warns her that once she becomes a land pony, she will never be able to return to the sea. Consuming the potion will make her feel as if a sword is being passed through her body, yet when she recovers, she will have two hind hooves and will be able to dance like no pony has ever danced before. However, she will constantly feel as if she is walking on sharp knives. In addition, she will obtain a soul only if she wins the love of Shining armor and marries him, for then a part of his soul will flow into her. Otherwise, at dawn on the first day after he marries someone else, Cadence will die with a broken heart and dissolve into sea foam upon the waves.
After she agrees to the arrangement, Cadence swims to the surface near the Shining's palace and drinks the potion. She is found by the Prince Shining armor, who is mesmerized by her beauty and grace, even though she is considered dumb and mute by everyone in the kingdom. Most of all, he likes to see her dance, and she dances for him despite suffering excruciating pain with every step. Soon, Cadence becomes Shining's favorite companion and accompanies him on many of his outings. When the Shining's parents encourage their son to marry the neighboring princess in an arranged marriage, the Shining armor tells Cadence he will not because he does not love the princess. He goes on to say he can only love the young unicorn mare from the temple, who he believes rescued him. It turns out that the princess from the neighboring kingdom is the temple mare. Prince Shining Armor declares his love for her, and the royal wedding is announced at once.
Prince Shining armor and the Unicorn Princess celebrate their new marriage on a wedding ship, and Cadence's heart breaks. She thinks of all that she has sacrificed and of all the pain she has endured for the prince. She despairs, thinking of the death that awaits her, but before dawn, Chrysalis the Changeling sea witch rises out of the water and bring her a knife she gives to her. If the Little Seapony Cadence kills Shining armor and lets his blood drip on her legs, she will become a seapony once more, all of her suffering will end, and she will live out her full life in the ocean with her family.
However, Cadence cannot bring herself to kill Shining armor lying with his new bride, and she throws the knife and herself off the ship into the water just as dawn breaks. Her body dissolves into foam, but instead of ceasing to exist, she feels the warm sun and discovers that she has turned into a luminous and ethereal earthbound spirit, a pegasus daughter of the air. As Cadence ascends into the atmosphere, she is greeted by other pegasi who tell her she has become like them because she strove with all her heart to obtain an immortal soul. Because of her selflessness, she will be given the chance to earn her own soul by doing good deeds to mankind for 300 years and will one day rise up into the Pegasus kingdom.