It was inspired by The Little Mermaid story, with a mermaid princess falling in love with a human boy. She transforms into a human and the two develop a relationship, but unfortunately she can't reveal her identity to him. And of course you throw in several other magical girls with stories of their own, and an evil criminal organization, and the result is pure awesome. XD
Mermaid Melody, like several anime I started recently, looked fairly odd at first, but it grew on me. Now I consider it my favourite. Seriously, XD.