An old carved stone is unearthed on Iloka. Its inscription states that when the stone is returned to its temple, the Milihune will return to Quetzo. Chief Kapuna becomes convinced that the stone is bad luck and throws it into the sea. Dexter finds it and, determined not to let the Milihune get into Quetzo, keeps the stone. Flipper and Lopaka, however, want to return it to the temple.

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.