The film opens as Rose (Brooke Adams) is found drifting alone in a small rowboat. Two fishermen find the dinghy and pull her onto their boat, barely alive and in a horrible state. Her voiceover indicates she had been rescued from some terrifying experience. The film's events are flashbacks.Rose is seen previously as part of a small group of tourists aboard a small commercial pleasure boat. The Captain (John Carradine) seems to be having trouble with the boat. His mate, Chuck (Fred Buch), seems to share a mutual attraction with Rose. Also on board are Dobbs (Don Stout), who is the boat's cook; Keith (Luke Halpin), another tourist; and a bickering married couple named Norman (Jack Davidson) and Beverly (D.J. Sidney).After some trouble with the engine, the Captain and Chuck are faced with the fact that their navigation system is going haywire after they encounter a strange orange haze. The others sense that something is wrong and that they may be lost at sea. Norman in particular becomes very whiny about it, insulting the Captain and being generally abrasive to everyone. In the darkness of night, a hulking ship suddenly appears and brushes up alongside their boat, damaging it. The Captain sends up a flare, which momentarily lights up the eerie sight of a huge, rotting vessel wrecked nearby.The next morning, everyone wakes up to find the Captain missing. Realizing the boat is slowly taking on water, everyone evacuates in the lifeboat and makes for a nearby island. They also see the huge wreck in the light of day; it appears to have been there for decades, nothing more than a skeletal framework, and now seemingly immobile, stranded on the island's reef. The group is startled to find the body of the Captain, apparently drowned while he was trying to check the underside of the boat for damage. They explore the island and discover a large, rundown hotel. At first they think it's deserted, but they soon discover a reclusive old man living there (Peter Cushing).The man seems alarmed by their tale of the "ship" that rammed their boat, and he goes down to the beach to see for himself. Under the water, strange zombie-like men begin to gather, walking from the wreck along the ocean floor until they're at the island. The next morning, as Dobbs gathers items to help him prepare food for the castaways, the zombies corner him in the water and one of them attacks; before it kills him, Dobbs falls in a cluster of sea urchins and is horribly mangled. Rose comes out to swim and discovers the body. Back inside the hotel, their reluctant host tells them that he was a Nazi commander in charge of the "Death Corps", a group of zombified men created to live underwater and in any type of condition. The creatures were intended to be a powerful weapon for the Nazis, but they proved difficult to control and were "recalled". Just as the war was ending, the Commander was at sea with them awaiting orders on how to proceed. When Germany lost the war, he decided to sink the ship and live in exile on the nearby island. Realizing the zombies have returned somehow, he says they are doomed. The Commander goes down to the beach again and sees a few of the zombies off in the distance; they refuse to obey him and disappear under the water. They follow him to a secluded place and drown him in a stream.The others attempt to locate a boat that the Commander told them about. They find it hidden in some brush, and pilot it out through the streams to the open water, but the boat becomes stuck on a mud bank and must be pushed; pursued by the zombies and struggling to control the boat, it gets away from them and sails off, empty. Norman is drowned in a stream by zombies, and Rose tries to make her way back to the hotel. Chased by a zombie, it gets her, but she pulls off its goggles and it dies.Chuck, Beverly and Keith also return to the hotel. They decide to barricade themselves inside the hotel's large refrigerator unit for protection from the zombies, but the close quarters and stress start to make the survivors fight with one another. Keith freaks out once they're inside with the door locked, and he fights with Chuck. In the melee, he pulls out a flare gun and ends up accidentally shooting a flare inside the cooler, blinding Beverly. Chuck and Rose escape to an old furnace room, where they hide inside two metal grates. Beverly, who now can't see anything, hides in a closet. Keith is confronted outside by the zombies; they corner him in a swimming pool and drown him.The next morning, Chuck and Rose discover Keith's body. They also discover Beverly dead, drowned in a large fish tank. Now on their own, they try to escape in a small sightseeing rowboat with a glass bottom. The zombies attack, and although Chuck manages to defeat one by pulling off its goggles, a second one grabs him and drowns him just as the dinghy breaches the reef and drifts free. Rose sees Chuck's lifeless body pressed up against the glass bottom of the boat and screams.The film has come full circle, with Rose's voice-over returning. She is now in a hospital bed, seemingly writing in a journal. Her dialogue begins to repeat itself over and over, and we see she is writing nonsense in her journal, apparently insane and unable to tell anyone her story about what happened to her and about the underwater Nazi zombies whom still roam the water around the deserted island.