Rikki and Cleo are about to face their final year of high school without Emma, who has gone travelling with her family. The JuiceNet cafe has now closed down and is just a vacant building on the coastline until Zane buys it and persuades Rikki to reopen it with him, renaming the cafe Rikki's in honour of her. At the cafe's opening night, Cleo and Rikki meets Bella Hartley, a new girl in town who does Rikki a favour by singing for her in Nate's band. That same night, free-diver Will discovers the Moon Pool and witnesses the full moon's effect on it. A strange creature made entirely of water forms and attacks Will. It then races to the cafe and kidnaps Rikki, dragging her back to Mako Island. To Cleo's horror, this all happens in front of Bella, but she has no choice but to dive in and rescue Rikki. However, Bella dives in after her, revealing that she is also a mermaid. Together, Cleo and Bella rescue Rikki from the water tentacle. Bella befriends Rikki and Cleo and the new trio is determined to find out what caused water to turn against them.
First day back at school, and the girls are surprised to discover that Will is attending too. Will is thrilled to see them, and asks for help relocating the Moon Pool, so that he can investigate what happened to him during the full moon. Bella (obviously smitten with Will), offers to help him, but promises the others that she will keep him away from the Moon Pool; but a suspicious Rikki follows her. Meanwhile, Lewis and Cleo are convinced that something has happened to change the Moon Pool, but can't figure out what.
Bella is pleased and Rikki wary when Cleo applies for a new job as an assistant dolphin trainer at the marine park. But she is soon in over her head, when Will visits the park, and takes a swim with Ronnie, and his influence has the dolphin performing tricks that he has never done before. However, head dolphin trainer Laurie mistakenly thinks that it is Cleo making Ronnie perform the tricks, and offers her a spot in the marine park's dolphin show. Meanwhile, Rikki fires the live band from the cafe after hearing Nate's terrible new song, but Bella gets the wrong end of the stick, and thinks that Rikki fired the band because she has an issue with her.
Valentine's Day comes to the Gold Coast, and the girls all seem to be having trouble with love. Rikki finds that the stress of running the cafe is destroying her relationship with Zane, Bella's crush on Will deepens, but she finds it hard to tell him of her feelings, and Cleo is less than impressed with Lewis' idea of a Valentine's date; fishing. Even Kim is having serious ‘boy trouble'. The only person who does seem to be having any luck in love is Cleo's father, Don, who falls for a pretty marine licensing inspector named Samantha. But it seems that he has blown his chance when she gets knocked overboard.
Zane's management style is steering the cafe into debt, and Rikki is not impressed with his new idea to hold a dirt bike race at the cafe to bring in more money. Zane has promised to give the winner of the race a prize of $1000, but, knowing full well that he is the best biker in town, enters the competition himself, so that he won't have to hand out the money. But he starts to doubt himself when experienced dirt biker Will enters the race after encouragement from Bella, and so enlists Nate to help him cheat. Meanwhile, Lewis and Cleo continue with their investigations on the Moon Pool, and make an amazing discovery when they mix water from the new waterfall with water from the pool.
As Bella grows more and more fond of Will, she tries to set up a study date so that they can spend some time together, but is hurt to find herself stood up. Furious, she goes to Will's boatshed to confront him, and is devastated to find him there with another girl. Meanwhile, Lewis' science teacher, Ms. Taylor, is impressed by Lewis' science project – not realising that it is actually his apparatus for studying the floating water from the Moon Pool. Lewis is then forced to show his experiment in class, putting the secret of the Moon Pool and the mermaids in danger. Ignoring Rikki's advice, Bella follows Will and the mystery girl on a diving trip, and they nearly see her, but Bella is relieved when she discovers that the girl is Will's sister, Sophie. Cleo uses her power to help Lewis replicate the effect of the floating Moon Pool water, and he submits an alternative science project, keeping the mermaids' secret safe.
Cleo and Kim's father Don takes them to the beach to get to know his new girlfriend, Sam. But while Cleo is willing to accept her for her father's sake, Kim hates her from the start, but uses the situation to get expensive gifts out of her father as bribes for her approval, much to Cleo's disgust. But Sam and Don get the wrong idea when Cleo refuses to go swimming with Sam, and think that Cleo is the one who has a problem with her. Meanwhile, Bella applies for a job at the cafe, and Rikki is keen to give it to her... except Zane wants to give the job to Will's ambitious sister, Sophie.
The girls prepare to sleep over at Cleo's for the full moon, to try to protect themselves from any water attack. Lewis makes preparations of his own by installing cameras in the Moon Pool cavern, in an attempt to capture the mysterious water tentacle on film, and learn more about how it is created. Will, meanwhile, decides to revisit the Moon Pool to continue with his investigations there, and drops by Cleo's to ask Bella to come with him. But Bella isn't there – she has been kidnapped by the water tentacle! Rikki and Cleo race to Mako Island to save her, while Lewis tries to keep Will away. At Mako, Rikki and Cleo discover that the tentacle seems to be turning Bella into water. But when they manage to pry her away from the tentacle, Bella says that she felt safe when she was with it.
When Lewis tells Cleo not to experiment with the floating water they collected from Mako, she cannot resist, and sends Lewis off for a day of golfing with her father, so that he won't discover her. But when Rikki accidentally gets the water in Cleo's fish tank, her goldfish, Hector, becomes imprisoned in a bubble of floating water! The girls' attempts to free Hector result in him going down the drain, and they must use their mermaid abilities to retrieve him from the canal. Also, the girls try to keep Will, who is in the house while looking for Bella with whom he has to do a project for school, from seeing Hector. Meanwhile, somewhere on the golf course, Lewis is pretending to lose to Cleo's father at golf, so that he can get into his good books.
When Rikki and Cleo realise that Will has made a connection between Bella, Mako, and the full moon, they warn Bella to stay away from him, but she can't. Will is also growing incredibly interested in her, and wants to spend time with her; but when he realises that Bella won't swim, he deliberately spills some water on her, thinking her secret might be something to do with water. In a panic, Bella dives into the water, but Will follows her... and discovers that she is a mermaid. Afterwards, Bella tells Will how she became a mermaid. Can he keep her secret?
Will's ruthless sister, Sophie, is training him to be a professional free-diver, only he'd rather spend time swimming with Bella. Irritated, Sophie tells Bella to stay away from Will, as she sees her as a distraction for him, but Bella doesn't listen. While watching Will train in a public pool, Bella dives in to help him with his swimming technique... just as Sophie turns up. Although Will manages to hide her, Bella is still worried, not about Sophie, but about Will. She thinks he only likes the mermaid side of her. Meanwhile, Rikki comes up with a brilliant idea to hold corporate events at the cafe, but after Zane makes a mistake with the booking, the cafe is overrun by a wild children's party.
On Rikki's birthday, Cleo and Bella travel to the Moon Pool, and make her a present using their powers; an elegant mermaid statue that Cleo moulds from water, and Bella hardens with her gelatine power. But when Will discovers the unusual present on Rikki's desk, he suspects that Cleo and Rikki know Bella's mermaid secret. Meanwhile, Sophie takes it upon herself to organise the cafe's first food delivery order, and sends Will to make the delivery, but he comes back with a payment of fake dollar bills. Realising that something is amiss, Rikki returns the fake bills to the address – a houseboat in the middle of nowhere – and discovers that the people on board are printing counterfeit money. When the criminals take her hostage on board the boat, Rikki manages to get a desperate message to Cleo and Bella, before her captors take her phone, and Bella and Cleo get Will to tell them where Rikki has gone – but not before he makes them admit that all three of them are mermaids. Realising that they must now all trust each other, Cleo, Bella and Will set off together to save Rikki.
The day of Don and Sam's wedding arrives, and selfish Kim tries to ruin everything. Meanwhile, Lewis gets the chance to spend three years working at a scientific research centre in America, but frets about telling Cleo... until Kim tells her for him. Cleo is distraught, thinking that Lewis planned to leave without telling her, and refuses to talk to him. Don and Sam's big day is then completely ruined when Kim turns on the sprinklers (nearly making Cleo, Rikki and Bella grow tails in front of everyone). In the end, Lewis tells Cleo that he is not going to America because he loves her, and Cleo forgives him. But she decides to let him go after all, and they part promising to see each other again. The girls organise another wedding ceremony for Don and Sam on Mako Island, and Kim at last warms to Sam.
Cleo finds an unusual crystal in a rock from the Moon Pool, identical to the one in Bella's necklace, which she collected from the Moon Pool in which she was transformed. Could this be the source of Moon Pool magic? Meanwhile, after discovering that Zane cheated in a free-diving competition, Will challenges him, and dives to a depth of 60 metres. But Will pushes himself too hard, and ends up passing out, forcing Rikki to dive down and save him.
After seeing the work done at the marine park by the charity Dolphin Rescue, Bella comes up with an idea to hold a fundraising event for them at the cafe, but is deflated when Sophie overhears, and steals her idea, presenting it to Rikki and Zane as her own. What is more, as Sophie is organising the event, she spitefully refuses to let Bella and the band perform. But she gets into trouble with Rikki and Zane, when all of the bands she has booked instead of Bella's pull out, after hearing that Sophie has tried to make Dolphin Rescue pay a fee for the concert. Sophie is fired from the cafe, and Bella and the band perform to save the night.
Frustrated by the water tentacle's constant attacks on them, Rikki travels to Mako Island at the full moon in order to confront it. With Bella and Cleo delayed, Will hurries after Rikki, but instead of finding the tentacle attacking her, he finds her somehow controlling it. Rikki appears to form some sort of connection with the tentacle, but when the full moon passes, she makes Will swear not to tell Bella or Cleo what happened.
Cleo is introduced to Ryan, a geophysicist working for Sam. Thinking that he might be able to help, Cleo shows him the magnetic crystal rock she found at Mako, which infuriates Rikki, who thinks that Cleo is putting their secret at risk. Cracks are beginning to form in the girls' relationship, and Cleo and Bella become worried when Rikki starts spending all of her time in the Moon Pool. This prompts Will to confess to them what happened on the night of the full moon when Rikki confronted the tentacle. Back at the Moon Pool, Rikki discovers that bonding with the tentacle has strengthened her powers.
Kim lets slip to geophysicist Ryan that Cleo and the others spend a lot of time on Mako Island, and Ryan goes there in search of more magnetic rocks like the one Cleo showed him. Rikki discovers this, and tries to warn the others that Ryan is on to them, but Bella and Cleo don't believe her, as they are beginning to lose trust in Rikki. Rikki goes to Mako Island herself (with Will tailing her), and uses her powers to destroy Ryan's equipment, but when she starts going too far, Will springs out, and stops her. The two of them are then forced to run and hide in the Moon Pool cavern when Ryan hears them and chases after them, but this leads to Ryan accidentally discovering the Moon Pool. Rikki forces Ryan out with her powers, but Will tells her that she has only made things worse. Realising that he is right, Rikki apologises, and, when she arrives home, reconciles with the others, and tells them of her experience with the tentacle, and how it has affected her. Rikki says she doesn't think the tentacle is trying to harm them, which opens up a new mystery. The girls must also figure out how they are going to put Ryan off the scent.
Will is getting sick of Sophie's pressuring him into competitive free-diving, but agrees to compete in a competition to set a new depth record. Sophie is delighted with Will's record breaking dive of 80 metres, but after the competition, Will gives up competitive free-diving to shrug off Sophie's influence. As Will sets his record, however, Rikki witnesses Sophie and Zane kissing, and her relationship with Zane is ended for good.
After breaking up with Zane, Rikki leaves the cafe in order to get away from him, and Zane re-hires Sophie as the new manager. Thrilled with her new position, Sophie immediately starts making changes to the cafe, and hires Cleo's sister Kim as a waitress. Meanwhile, Will's new after shave gives Bella a sneezing allergy, which also inadvertently triggers her powers. Unable to perform without sneezing (and unleashing her mermaid powers on everyone), Bella is close to being fired from the cafe by the brutal Sophie.
Since saving his life when he passed out during a dive, Rikki has formed a close friendship with Will, and is touched when he makes her a necklace, similar to Bella's, using the magnetic crystal found on Mako Island. Rikki and Bella experiment with their crystals, and are fascinated by how they react when near each other; the crystals produce a blue glow that mesmerises the girls, similar to the effect of a full moon, and, when actually touched together, they release a powerful energy burst, that causes an electrical blackout! The girls decide to keep the crystals apart until they learn more about them, and Rikki leaves hers with Will. But a jealous Zane, mistakenly thinking that Rikki and Will are going out, breaks into Will's boatshed, and steals the necklace. A furious Rikki gets it back from him, and tells him once again that their relationship is over. Will makes another necklace for Cleo, and the girls wear them as a symbol of their friendship.
A stressed out Cleo is trying to plan study sessions for the girls' final exams, but Bella and Rikki are more preoccupied with finding out about the tentacle. The girls are forced to make a quick exit when, during their science exam, the full moon rises early, and the tentacle tries to reach them through a water cooler in the classroom. They travel to Mako Island, and confront the tentacle, this time without fear, and realise that it is not trying to harm them, but get a message to them. The girls all place their crystal necklaces in a hole in the cave wall, triggering a projection to appear in the air. The girls watch it, and see a comet travelling towards the Earth, but before they can watch the whole message, Zane and Will interrupt them, and the projection stops. The girls are confused as to whether the Moon Pool was showing them the past (the creation of the Moon Pool itself), or the future.
The Gold Coast is playing host to a massive beach party, and Bella wants to ask Will if he will go with her. But she is upset when she misunderstands a conversation she hears between Rikki and Will, and thinks that they are going together. Bella then has no alternative but to ask Nate, which confuses Will (as he was about to ask her). Things are straightened out at the party, however, when Zane tells Will to stay away from Rikki, and Will exclaims that he likes Bella. Bella and Will become a couple. Meanwhile, Sophie is trying to persuade Zane to change the name of the cafe.
When Kim demands an expensive holiday, Cleo's father gets a second job doing a pirate show at the marine park, so that he can afford it. At first, Cleo is worried that her father will humiliate himself; but when the dolphin shows start emptying out, Cleo realises that her father is more popular than she thought, and his shows threaten to end Cleo's job. Meanwhile, there is trouble between Bella and Will, when they struggle to find things in common.
The girls find a way to simulate a full moon, so that they can finish watching the message the Moon Pool was trying to show them. They discover that the comet they saw is being drawn towards the Earth by the Moon Pool's magnetic pull, and is going to hit Mako Island. The girls must try to harness the power of Mako Island's magnetic crystals to force the comet away, and save the Earth. Meanwhile, the cafe is in danger of going bankrupt, and Sophie is searching for ways to earn more money. She gets her chance when Ryan (who is annoyed that Sam has ended his research on Mako Island), spots the crystal in Bella's necklace, and tells her that it might be valuable. After finding out where Will got the crystal from, Sophie leads Ryan to Mako Island (with a reluctant Zane close behind), and they discover the magnetic crystals in the walls of the Moon Pool cave.
By harvesting the magnetic crystals, Zane, Sophie and Ryan have severely damaged the Moon Pool, and the girls find that it no longer has enough power to push the incoming comet away from the Earth. All seems lost, but Bella, Cleo and Rikki band together, and use their own magic to create a tower of water and light, that knocks the comet off course, making it miss the Earth. With the Earth saved, the girls then graduate from school, and celebrate in the cafe, but there is one more surprise in store for them... Lewis has returned home.