Set four years after the events of the first movie, Allen Bauer (Todd Waring) and his wife Madison (Amy Yasbeck), a mermaid, have been living on a deserted island hideaway. Allen is bored with life on the island and admits he misses New York City and his older brother, Freddie. Madison has the magical ability to view images and communicate by running her finger in a circular motion over liquid water; she uses this method to show Allen how things are going on back in New York with Freddie (Donovan Scott).
The family business, Bauer Produce, is in trouble since Allen left. Madison offers to go back to New York with Allen so he can help out, and they do. They are welcomed back by Freddie, and Allen manages to attract a potential new customer for Bauer Produce, the wealthy Karl Hooten (Noble Willingham). Karl places importance on all-American family values, so Allen and Madison are to present themselves as a typical happily married couple. Freddie gives them a run-down suburban house for them to move into, which they manage to restore into presentable condition.
Madison agrees to be a housewife and adjust to life on land. She also has to keep her mermaid side a secret, especially from their new neighbor, Mrs. Needler (Doris Belack). When Allen's work takes up more of his time and he breaks some promises to her, his relationship with Madison is strained. Madison finds comfort with her new friend Fern Hooten (Rita Taggart), Karl's wife, who supports Madison's desires to find her own interests.
During a business event at an aquarium, Madison sees one of her dolphin friends, Salty, in one of the tanks. Madison is upset by this, especially because Salty has a mate out in the wild. Karl is one of the benefactors of the aquarium, so Madison asks him to let Salty go. This causes more friction between Madison and Allen, as Bauer Produce still needs Karl's business and Allen doesn't want to get on Karl's bad side. Madison declares her unhappiness with how Allen is treating her and disregarding her feelings, and leaves off swimming into the ocean.
Allen realizes his mistake and regrets pushing Madison away. When Madison returns to the house, Allen apologizes and the pair reconcile. They sneak into the aquarium, where Dr. Otto Benus (Mark Blankfield) is doing research on Salty, and try to set him free. They are almost caught, but Fern Hooten comes to their aid and helps them get Salty on to a van and out to the ocean.
At the sea front, Salty is released into the ocean and returns home to his mate. Madison and Allen talk about their future and agree to be honest. Allen agrees to return to the sea with Madison if that's what she wants, but he would prefer to stay on land. Madison agrees to stay on land with him, as she has many things she would like to do. The pair embrace.
With a production budget of $3.3 million, Splash, Too was the first movie to be filmed at the then-new Disney-MGM Studios complex. Dozens of actresses were looked at to play the role of Madison, but none were right for the role until the producers found Amy Yasbeck, who did a screen test for director Greg Antonacci, was cast at the start of 1988. Yasbeck had to wear a blonde wig (over her red hair, which was cut to her shoulders to accommodate wearing the wig) when playing Madison. Yasbeck went through a crash course in scuba diving as well as extensive physical training to prepare to play Madison in the underwater swimming shoots with her mermaid tail costume. Yasbeck was originally going to wear the mermaid tail costume worn and used by Daryl Hannah from the original Splash (1984) film, but she could not fit into it. (Daryl Hannah's Splash mermaid tail was designed and constructed by Academy Award-winning visual effects artist Robert Short. Thom Shouse was the project foreman on Short's mermaid crew.) After undergoing a bodycast, new form-fitted mermaid tails were made for both her and her stunt double Arlene Klein, by Shouse, best known as the Tail Man. The tails made for Splash, Too were easier to put on than the one made for Hannah since they had been made with a zipper. Nevertheless, it took three people to zip up the tail on Yasbeck, and then lift her into the water. Yasbeck received instructions when swimming to only use the tail, and never to use her arms, keeping them at her sides. Yasbeck would spend an hour at a time underwater, frequently taking breaths from the oxygen tanks of nearby divers. The tail was heavy for the actress to wear.
The film was almost entirely recast from the 1984 original, with Dody Goodman (Mrs. Stimler) as the only returning cast member from the first film.
Splash, Too was released on home video (VHS tape) in the United Kingdom and Australia by Walt Disney Home Video. Both the UK release and Australian release have been out of print for many years, but sometimes show up on auction sites. There has been no official home entertainment release of any form (VHS, DVD or Blu-ray) in North America (region 1, NTSC format) from Walt Disney Studios Home Entertainment. Company's such as Amazon and other DVD manufacturer's are finding the best to make a 30th Anniversary Edition DVD (All Region) coming out in 2018. Disney has no interest in the release.