She kissed Shrek on his honeymoon on a beach when a wave washed him and Fiona up. Fiona saw this and wasn't happy, so she drags her by the fin and threw her straight into the ocean. As she screams, she landed with a splash near two great white sharks, that apparently devoured her to death. She is then briefly mentioned by the Fairy Godmother, explaining that her story has no ogres involved.
Though it is generally assumed that she died at the beginning of the film, it is unclear if she actually died, since it is unclear what happened after she landed back in the ocean next to the sharks, other than that the sharks dived in on her.
Shrek kissing The Little Mermaid.
The Little Mermaid washes Fiona away kissing Shrek.
Shrek shockingly surprised when he saw a mermaid.
The Little Mermaid screams.
Fiona dragging her across the sand.
The Little Mermaid screaming as she flies across the air.