The Shape of Water is a beautiful film and I hope that its Best Picture win will encourage more people to seek it out. Back when we reviewed the film for The Spoiler Warning Podcast, I stated what I thought were obvious observations about the ending of the film. Mainly that the character of Giles paints a fairytale end with his narration to obscure the true tragedy of the films narrative. I was quite surprised with the pushback I received for my reading of the film. Having revisited the film, I felt inspired to collect my arguments here. Obviously, spoilers to follow.

What we see on screen:

If we take what we see on screen literally, the climax of the film happens as follows:

Elisa takes a bullet to the chest
Amphibian Man avenges her likely death
Amphibian Man picks up Elisa's lifeless body, carries her to the waters edge, and jumps in.
Under the surface, the Amphibian Man kisses Elisa and covers her wounds with his hands.
Moments later the scars on her neck sprout open to reveal gills and she springs back to life.

What really happens:

What happens in reality is as follows:

Elisa takes a bullet to the chest, a wound that is fatal.
Amphibian Man avenges her death.
Amphibian Man picks up her lifeless body and retreats to the sea.
Giles invents a poetic ending for her so that she can be remembered triumphantly.

Showing my work:

Now I may be a cynical person, but my cynical nature isn't the source for my take on the ending of the film. I believe the truth is evident both on the screen and on the page. And so, I'll turn to the visuals of the film and the text of the script for my evidence.

Argument 1: The ending shots mimic the visuals AND FANTASY of the opening shot.

As the film opens, we begin under water, seemingly at the bottom of a river somewhere. Slowly pieces of 'the real world' make their way into the shot and we reveal Elisa floating in her apartment in what is clearly a fantasy sequence. The sequence is then broken by an alarm, which brings up back to the reality of her apartment.

We float at the bottom of a river. Surrounded by water.
Fish swim away. Debris floating in the water- And, then, a lamp floats by- A coffee pot- A shoe.
Camera pushes and we see: An entire apartment underwater. Objects and furniture float, gently suspended, defying gravity. Asleep on/above her bed -- half floating, half weighed down: ELISA. Roughly 30, but ageless, with child-like eyes, dark,lush hair and a thin, beautiful mouth slightly curved into asatisfied smile.
She slowly settles/drifts down on the mattress below as anearly digital alarm clock lazily floats over a night tablenearby...
SUDDENLY: The alarm goes off!

In the interest of time, I'm going to operate under the assumption that we can all agree this opening shot is a complete fantasy. No one here believes that Elisa was actually floating and breathing under water in the opening of the film...

Now lets compare this to the ending scene of the film.

UNDERWATER
Elisa and the creature sink softly, gracefully. Fish dart by- Odd drifting objects... empty food cans, an alarm clock...

From the moment the Amphibian Man jumps into the water, we start to mirror the opening of the film. Almost identical imagery is used to describe our introductions to each location—Fish retreating, strange debris floating around, and an alarm clock. In the opening an alarm clock breaks the fantasy and rips us into reality. Conversely, the ending plunge into the water breaks reality and submerges us into fantasy.

Argument 2: The story is told from Giles POV and his account ends at the surface.

The story of 'The Shape of Water' is told to the audience by the character of Giles, who is also the films narrator. Obviously, there are a number of scenes in the film—Elisa's 'morning routine', Dr. Hoffstetler's meeting with the Russians, Strickland's dealings with his wife—where Giles clearly didn't witness the accounts of the narrative. For most of these exceptions, I'm fine hand-waving them away as they're necessary extrapolations of the greater narrative that is being told. Additionally in each case there are clear narrative trails that would lead details from the source, to Eliza, and then to Giles.

From the moment the Amphibian Man dives into the water, Giles loses all connection to the narrative he's trying to weave.

Giles moves to the edge of the pier- looks down. Zelda comes to his side- trembling. Tears streak her face, mixing with the rain.
ZELDA
They’re together, aren’t they?
GILES
Yes. I believe they are...
They hold hands.

This is the last moment we have on the surface. Giles never again sees Eliza or the Amphibian Man. He simply transitions into narration.

GILES / NARRATOR
If I told you about it- What would I Say? That they lived happily ever after? I believe they did... That they were in love- that they remained in love? I’m sure that is true...

Giles has nothing to base this on, but he wants it to be true. Over the course of the film, we've learned a lot about his character and his own struggle for love. We've also listened to him dream about the different choices he'd make if he could return to his younger self.

To be young and beautiful. If I could take this brain of mine- this heart- and put in it- If I could go backin time, when I was eighteen- I didn’t know anything about anything- I- would give myself a bit of advice...

Giles is a hopeless romantic and he wants—maybe needs— for Eliza to have lived happily ever after. He chooses to believe without evidence, because it's the reality he chooses for himself.

Argument 3: Giles tips us off in his opening narration.

In the film's opening Narration, Giles tips us off and tells us that this is a story about LOVE AND LOSS:

If I spoke about it- If I did- whatwould I tell you, I wonder? Would I tell you about the time...? It happened a long time ago- in the last days of a fair Prince’s reign... Or would tell you about the place? A small city near the coast but far from everything else... Or would I tell you about her? The princess without voice...
Or perhaps I would just warn you of the about the truth of these facts and the tale of love and loss and the monster that tried to destroy it all...

Giles knows the tragic truth of the story he's trying to tell and he wrestles with how he wants to spin it. He ends his story with a hopeful outcome and a desire to believe everything worked out. He knows, however, that the truth is actually more tragic.

What other loss could he be talking about? Clearly, no one cares that Strickland's throat is slashed by the Amphibian Man and Dr. Hoffstetler is killed in another location during the film's climax. There is no other loss to speak of in the film's narrative. Eliza's death is the only thing Giles can be talking about.

Argument 4: The Amphibian Man doesn't actually have the power to resurrect.

Part way through the film, we begin to discover abilities or powers that the Amphibian man has. We see him touch Giles arm and heal scratches. We also see him trigger hair growth on Giles balding head. So he has the power to heal, but does this power extend to resurrection?

I would argue that it does not. I would further argue that—even in a world where you flat out reject my arguments 1, 2A, & 2B—there is no way the Amphibian Man's healing powers would be enough to overcome Eliza being literally shot in the heart.

If we assume Guillermo Del Toro's infallibility—taking for granted there are no plot-holes in his depiction of the Amphibian Man's powers—we see a clear limit established to the healing powers in the film.

One of Gile's character flaws—or charms rather—is that he's constantly taking in strays. In a scene that is sort of played for laughs, the Amphibian Man murders one of Giles' strays because he's hungry. The scene results in the death of a cat, the scratching of Giles' arm, and remorse on the part of the Amphibian Man.

Realizing he has done a bad thing, the Amphibian Man heals Giles' arm. He does not, however, heal the cat. Why is this? Del Toro clearly didn't forget about the cat's murder—proven by a later visual gag where other strays in the house stare suspiciously at the Amphibian Man. I would argue that the cat is not healed because it is beyond healing.

Scrapes, wounds, and hair cells regenerate on their own. This may happen slowly over time and get even slower with time, but it does happen on its own. It seems evident to me that the Amphibian Man's power accelerate or reboot the natural growth and regeneration processes of the body. What it doesn't do is regenerate dead cells.