Dark Life is the story of Ty, a teenage boy living under the sea. He meets Gemma, a teenage girl from the land, who has gone under the water searching for her brother. When an outlaw group called the Seablite Gang attacks a homestead, Ty and Gemma get more involved than they would like with the attempt to capture the bandits. They find out that Shade is actually Gemma's brother, who can change his appearance thanks to his 'Dark Gift.' Ty also has a Dark Gift that he has been keeping secret, which he decides to reveal to the other settlers in order to save Shade's life. When the settlers are caught in the Trade Station as it floods, Ty uses his Dark Gift to call to a pod of dolphins to save them all.

Ty is the first child to be born under the ocean. He is a member of the Benthic Settlement, the first pioneers to move subsea after rising sea levels swallowed up half the world. Children who grow up under the sea have Dark Gifts, special abilities caused by the water's pressure on their developing brains. Ty's power is biosonar; he can use sonar to 'see' underwater and to communicate with animals such as dolphins and whales. When he was little he was taken to Topside doctors and experimented on, and had to pretend that his ability had gone away before they would let him go. Now he hides his ability from everyone else and encourages the other children to do the same.

Ty meets Gemma, a Topsider girl looking for her brother, on a derelict submarine. They run away from the Seablite Gang and Ty brings her home. When Ty's neighbor's house is attacked by the outlaws, Ty and Gemma help them out. Ty gets a good look at Shade, the albino leader of the gang. Later, when helping Gemma to locate her brother, Ty sees Shade in the saloon on the Trade Station. Shade's skin color is now different, and Ty knows he needs to tell the other settlers this information, despite Shade's threats to him.

On their way home, Gemma and Ty are attacked by the outlaws, but they manage to escape. They find the prison that the Seablite Gang escaped from, but discover that it is not actually a prison at all. It was a reformatory where children were abused by the government and forced to pan for black pearls. However, any sympathy they might have had for the gang is ended when they find out that Gemma's brother is dead, murdered by the Seablite outlaws.

That night the Seablite Gang attack Ty's homestead and Shade tries to take Gemma. Ty's little sister Zoe uses her Dark Gift to electrocute him, and Shade is captured. However, when Ty and Gemma go to identify him, Shade changes his appearance in front of Ranger Grimes. He then grabs Gemma and threatens her. Ty if forced to get the key and let him out. Ty then realizes that Gemma is missing, and finds her in the saloon talking to Shade. Shade reveals that he is actually Gemma's brother, and that he has a Dark Gift that lets him change his appearance. Just then, a posse of settlers comes in and tries to hang Shade for his crimes, but Ty manages to stop them. He reveals that Dark Gifts are real, and asks the other settlers not to be afraid of them. Shade tells them that Doc Kunze is not their friend, and that he wants to experiment on their children. Doc tries to kill Shade but misses, and then swims away.

Shade leaves with his gang. He tells Gemma that she cannot come with him, but he signs her emancipation form, meaning that she is no longer under government control. However, Doc's missed shot actually pierced the wall, and now the sea starts flooding in. The settlers are trapped, but Ty manages to save them by using his Dark Gift to call to a pod of dolphins. The dolphins carry them to safety, but Gemma is nearly killed when Doc tries to grab her dolphin. On deck, Zoe uses her Dark Gift to restart Gemma's heart. The settlers realize that Dark Gifts can be a good thing after all. They are shocked about what the government did to the Seablite Gang, and what Doc was intending to do to their children. They decide that Benthic Territory would be better off if it was independent from the Commonwealth.