The narrator recounts his secret investigation into the eerie town of Innsmouth, Massachusetts, a once-thriving seaport now shrouded in mystery and decay. His story begins with a keen curiosity sparked during a trip across New England, when he stops in nearby Newburyport to gather local legends and historical tidbits about Innsmouth. He learns that the town was prosperous during colonial times and the early years of the United States, primarily due to thriving shipping and shipbuilding industries. However, this prosperity started to decline after the War of 1812, which disrupted maritime trade, and an epidemic in 1845 that wiped out a significant portion of its population.
A notable figure named Obed Marsh played a crucial role in the town's dark history. Marsh, a merchant, established a lucrative gold refinery and founded a clandestine pagan cult called the Esoteric Order of Dagon. This cult, rooted in mysterious, superstitious practices, became the dominant religion in Innsmouth. The residents, who regard outsiders with intense hostility, have an unusual appearance marked by queer narrow heads, flat noses, and bulging, starry eyes. They also share an unmistakable fishy odor, which contributes to the atmosphere of unease.
While waiting for a bus to Innsmouth, the narrator learns more about the town from locals and manages to get a glimpse of its unsettling architecture and inhabitants. The only seemingly normal person he encounters is a grocery store clerk from Arkham, who provides him with a map and introduces him to Zadok Allen, an ancient, drunken local who is willing to share his disturbing knowledge about the town. Zadok reveals that Marsh, during his travels in the Pacific, discovered a tribe in the Caroline Islands—specifically in Pohnpei—that performed human sacrifices to a race known as the Deep Ones, fish-like beings with advanced immortality. These creatures breed with humans, creating hybrids that look completely human in childhood but gradually transform into Deep Ones as they age, ultimately venturing beneath the sea to live in vast, ancient cities like Y'ha-nthlei beneath Devil Reef.
The cult of Marsh and others engaged in sacrifices to the Deep Ones in exchange for prosperity—bountiful catches, unique jewelry, and wealth. When the authorities eventually arrested Marsh and his followers, the Deep Ones retaliated with a brutal attack, killing more than half the town’s population and forcing the survivors into horrifying alliances. These factions continued to breed with the Deep Ones, producing hybrid offspring who, upon maturity, left the surface world to inhabit the submerged city. The town's leadership, including Marsh's grandson Barnabas, is described as nearly fully transformed into Deep Ones, highlighting the terrifying extent of this alliance.
Zadok warns that the Deep Ones harbor plans to expand their influence on the surface, involving shoggoths, semi-sentient creatures that could help conquer or dominate the human world. Just as the conversation reaches its tense climax, Zadok detects approaching waves and urges the narrator to leave immediately, hinting that the town's creatures are aware of him. Zadok then vanishes mysteriously, leaving the narrator to flee in terror.
The narrator’s escape is frantic and perilous. After being stranded when the bus breaks down, he endures a night of lurking threats and encounters the creatures himself—gruesome, fish-headed beings communicating through guttural croaks with gray-green skin, gills, and webbed hands. His horror peaks as he witnesses their procession and passes out, only to awaken alone and unharmed hours later.
Back in Arkham, the truth about Innsmouth begins to intertwine with his own family history. The narrator uncovers that his grandmother was somehow linked to Obed Marsh’s lineage, and his relative, an uncle who had previously investigated the family's links to Arkham, had tragically taken his own life. As he delves into genealogy, he discovers that he is a descendant of Marsh through the second wife, Pth’thya-l’yi. Over time, the narrator himself begins to change—his speech becomes strange, and he experiences vivid dreams of his ancestors and the flooded city of Y'ha-nthlei, which, though damaged, endures beneath the sea. These dreams reveal that the Deep Ones remain patient, waiting for the right moment to return and perhaps bring chaos or chaos-like influence to the surface world, as they heed the call of Great Cthulhu.
Eventually, the transformation becomes undeniable—he develops the Innsmouth look, with a face that bears the fish-like features of his ancestors. The instinct to end his life strikes him, and he purchases an old pistol, but he cannot bring himself to commit suicide. Instead, overwhelmed by what he has learned and experienced, he suffers a mental breakdown. In his final act of despair and determination, he resolves to rescue his even more transformed cousin, Lawrence, from a sanatorium and bring him to live beneath the waves in Y'ha-nthlei. The story ends with an haunting acknowledgment of the looming threat from the depths, and the narrator's surrender to his cursed heritage.
