Elisa Esposito, who was found abandoned as an infant with wounds on her neck by the side of a river, is mute and communicates through sign language. She works as a cleaner at a secret government laboratory in Baltimore, Maryland in 1962, during the Cold War. She lives a very routine life, even masturbating at the same time every day which she times with an egg timer. Her only friends are her closeted next-door neighbor, Giles, a middle-aged struggling advertising illustrator, and her co-worker Zelda Fuller. The facility receives a mysterious creature captured from a South American river by Colonel Richard Strickland, who is in charge of the project, to study it. Curious about the creature, Elisa discovers it is a humanoid amphibian. She begins visiting him in secret, and the two form a close bond.
Seeking to exploit the Amphibian Man for a US advantage in the Space Race, General Frank Hoyt is eventually persuaded by Strickland to vivisect it. Dr. Robert Hoffstetler – a scientist who is secretly a Russian spy named Dimitri Mosenkov – pleads unsuccessfully to keep the Amphibian Man alive for further study and simultaneously is ordered by his Soviet handlers to euthanize the creature. When Elisa overhears the American's plans for the Amphibian Man, she persuades Giles to help her liberate him. Hoffstetler stumbles upon Elisa's plot in progress and chooses to assist her. Though initially reluctant, Zelda also becomes involved in the successful escape.
Elisa keeps the Amphibian Man in her bathtub, planning to release him into a nearby canal in several days when it is scheduled to rain to provide access to the ocean. Strickland interrogates Elisa and Zelda, among others, but learns nothing. Back at the apartment, Giles discovers the Amphibian Man devouring one of his cats. Startled, the Amphibian Man slashes Giles's arm and rushes out of the apartment. He gets as far as the cinema downstairs before Elisa finds him and returns him to her apartment. The creature touches Giles on his balding head and wounded arm; the next morning, Giles discovers his hair has begun growing back, and the wounds on his arm have healed. Elisa has sex with the Amphibian Man.
General Hoyt unexpectedly arrives and tells Strickland he has 36 hours to recover the Amphibian Man, or his career and life will be over. Meanwhile, Hoffstetler is told he will be extracted in two days. As the planned release date approaches, the Amphibian Man's health begins to deteriorate. Hoffstetler goes to meet his handlers with Strickland tailing him. At the rendezvous, Hoffstetler is shot by one of his handlers, but Strickland in turn not only shoots and kills both handlers, but also shoots Hoffstetler, having realized that he is a spy. Strickland tortures the dying Hoffstetler into revealing specifics on the "team" which broke out Amphibian Man, and is surprised to learn that Elisa and Zelda are implicated. Strickland threatens Zelda at home, unsuccessfully, until her husband, Brewster, reveals that Elisa has the Amphibian Man. Zelda immediately telephones Elisa, warning her to release the creature. An enraged Strickland ransacks Elisa's empty apartment until he finds a calendar note revealing where she plans to release the Amphibian Man.
At the canal, Elisa and Giles are bidding farewell to the creature when Strickland arrives, knocks Giles down, and shoots both the Amphibian Man and Elisa. The Amphibian Man quickly heals himself and slashes Strickland's throat, killing him. As the police arrive on the scene with Zelda, the Amphibian Man takes Elisa and jumps into the canal where he heals her. When he applies his healing ability underwater to the scars on Elisa's neck, they open to reveal gills like his; she jolts back to life and the two embrace. In a closing voice-over narration, Giles conveys his belief that Elisa lived "happily ever after" and "remained in love" with the Amphibian Man.
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