We meet our storyteller, Horatio Hermit Crab, who begins to tell the other undersea creatures about the exploits of young Rocky and Priscilla Shore Crab.
Trying to find their way back home, Rocky and Priscilla meet a sneaky dogfish. Priscilla finds an admirer, but Rocky is taken prisoner by the dogfish king.
Horatio finds a new, jazzy home to live in, but begins to miss his faithful companion Albert Sea Anemone, who is still attached to Horatio's old shell.
Rocky and Priscilla find themselves at Rancho Crab, a strange place where the food is free and plentiful. They meet the sinister crab leaders: Snively and Jake.