Sebastian's feeling a little down with the tide. For some reason or the other, he's being pushed around and swept up in crowds more often than usual, and is feeling very small and helpless.
The gang (Ariel, Flounder and Urchin) try to cheer him up by playing Urchin's new board game, but when Urchin suggests that he use Sebastian as one of the board pieces, the crab snaps. He loses his temper and flails around screaming injustice at being treated as nothing more than a tiny little runt, while his friends watch in horror.
That night Urchin and Flounder meet up with Ariel at the palace. Urchin explains that he's exchanged his game for a map leading to a Magical Cave, where he hopes they can find a way to help Sebastian. There, they learn that one of them may enter the cave and gain magic to do all sorts of spells. After Urchin backs out nervously, Ariel volunteers. Ariel, now a sea witch, wishes for Sebastian to become big, but nothing happens. At first.
The next day, Sebastian starts growing... and growing... and growing. At first Sebastian is incredibly happy, and uses his new size to help the merpeople. He gains popularity among Atlanticans, and though the gang are happy for him, they miss being able to just hang out.
Soon enough, Sebastian's size becomes too much. He's become destructive and is overeating. He asks for Ariel to adjust his size a little bit, and when Ariel tries to comply, her magic doesn't work. Sebastian announces that he has to leave Atlantica, but the gang are quick to follow. They return to the Magical Cave, and learn that Ariel's magic will only be replenished during the full moon.
But Sebastian continues to grow, until his head bursts through the surface of the ocean. He is spotted by human whalers, who immediately try to capture him. But it just so happens that there is a full moon out, and Ariel can use her magic. After a few false starts, Ariel manages to save the day, and everything's back to normal — literally.
As for Sebastian, at last he realizes that he has wonderful friends, and being small doesn't really matter that much anyway.