While oceanographer Steve Zissou is working on his latest documentary at sea, his best friend and chief diver, Esteban du Plantier, is eaten by a 10-meter-long, luminescently-spotted creature Zissou describes as a "jaguar shark." Fictional marine animals like the crayon ponyfish and sugar crab also appear as props throughout the film. For his next project, Zissou is determined to document the shark's destruction.
The crew aboard Zissou's aging research vessel Belafonte includes his estranged wife Eleanor, chief strategist and financial backer; Pelé dos Santos, a safety expert and Brazilian guitarist who sings David Bowie songs in Portuguese; and Klaus Daimler, the German first mate who views Zissou and Esteban as father figures. Minor crew members include Vikram Ray, cameraman; Bobby Ogata, frogman; Vladimir Wolodarsky, physicist and soundtrack composer; Renzo Pietro, sound man; and Anne-Marie Sakowitz, a script girl who is often seen topless. Also included is a recent group of unpaid interns from the University of North Alaska. However, the "Team Zissou" venture has hit a decline; they have not released a successful documentary in nine years.
Ned Plimpton is a longtime Zissou fan whose mother has recently died, and he believes that Zissou is his father. After they meet at Zissou's latest premiere, Ned takes annual leave from his job as an airline pilot in Kentucky to join his crew. As Oseary Drakoulias, Zissou's producer, can not find anyone to finance their latest documentary, Ned offers his inheritance. Eleanor feels her husband is taking advantage of Ned and leaves. A pregnant reporter, Jane Winslett-Richardson, comes to chronicle the voyage. Both Ned and Zissou are attracted to Jane, and a competition develops between them. Klaus becomes jealous of the attention Zissou pays to Ned.
On their mission to find the jaguar shark, the Belafonte steals tracking equipment from a remote station owned by Alistair Hennessey, a more successful oceanographer and Zissou's nemesis. They then sail into unprotected waters and are attacked by Filipino pirates, who steal Ned's money and kidnap Bill Ubell, a "bond company stooge" assigned to the project. They are then rescued by Hennessey and towed to Port-au-Patois. Sakowitz, along with all but one of the interns, jumps ship once they reach port.
Zissou convinces Eleanor to rejoin the Belafonte, and then leads the crew on a rescue mission. They track Bill to an abandoned hotel on a remote island, saving him along with Hennessey, whom the pirates have also kidnapped. Ned and Zissou then make one last search for the shark in the ship's helicopter, but the aircraft malfunctions and they crash. Ned dies from his injuries and is buried at sea. Prior to Ned's death, Eleanor revealed to Jane that Zissou is sterile, therefore Ned could not have been his son.
Zissou finally tracks down the shark in a submersible but he decides not to kill it, both because of its beauty and not having any more dynamite. At the premiere of the finished documentary (which is dedicated to Ned), Zissou receives a standing ovation while waiting outside the theater for the premiere to finish. The crew returns triumphantly to the ship the next day.