Professor Ahab, a marine biologist, anchors off Iloka to capture a white whale for research. Underwater, Flipper is learning to use his innate sense of direction when he is disorientated by the sonar from Ahab's boat. Flipper and Lopaka escape the sonar by swimming to Flipper's Grotto, where they discover a white whale and her baby hiding.

A killer whale - Orkie - returns to Quetzo to settle an old feud with Flipper. Dexter, determined to provoke a big showdown between the two, gets Orkie really angry and then convinces the rest of the town not to help Flipper. Finally Flipper and Orkie and they end their feud to save the school.