The beautiful Neapolitan girl Teresina loves Gennaro, a fisherman. Gennaro and Teresina sail out into the Gulf of Naples. A storm washes Teresina into the sea. Gennaro sets out to save her. Teresina has been taken to the blue grotto (a rocky cave) by sea spirits. The grotto is the home of the powerful spirit Golfo. He plans to keep Teresina in the grotto. He changes her into a spirit. Gennaro sails into the grotto. He prays to the Madonna and Teresina becomes herself again. Gennaro and Teresina go back to Naples. The people believe Teresina was saved through witchcraft. A priest says it was a miracle. The people are happy. Teresina and Gennaro marry.