The story is narrated as a "found manuscript" penned by Karl Heinrich, Graf von Altberg-Ehrenstein, a lieutenant-commander in the Imperial German Navy during the days of World War I. It documents his untimely end at the bottom of the ocean.
Altberg begins by declaring that he has decided to document the events leading up to his final hour in order to "set certain facts" before the public, aware that he will not survive to do so himself.
The manuscript states events from June 1917 to August 1917 in the North Atlantic ; after sinking SS Victory, a British freighter, and thereafter sinking its surviving crew's lifeboats, the cruel and arrogant Altberg commands his U-29 u-boat to submerge, surfacing later to find the dead body of a crew member of the sunken ship, who died clinging to the exterior railing of the sub. A search of the body reveals a strange piece of carved ivory. Because of its apparent great age and value, one of Altberg's officers keeps the object, and shortly thereafter, strange phenomena begin to occur.
An uncharted oceanic current pulls the sub southward, and several members of the crew suffer the sudden onset of severe fatigue and disturbing nightmares. One even claims to have seen the corpses of the dead seamen from the British freighter staring at him through the U-boat's portholes. Altberg has him brutally whipped, rejecting the pleas from some of his men to discard the ivory charm. He eventually resorts to executing a couple of them when it is clear that they have gone insane from fright, ostensibly to maintain discipline.
Next, a mysterious explosion irreparably damages the U-boat's engines, leaving them without the ability to navigate, only the ability to surface and dive. They soon encounter a United States warship, and several of the terrified crew plead with Altberg to surrender, but instead, Altberg has these "traitors" killed. Later, the submarine faces ominous waves from a violent storm and Altberg orders the u-boat to submerge. Afterward, it is unable to surface when its ballast tanks fail to repressurize, leaving the submarine being pulled southward without resistance while slowly sinking deeper into the ocean; they never see the light of day again.
With the U-boat's batteries running low, and their chance of rescue non-existent, the six remaining, delirious crewmen attempt a mutiny, successfully disabling the u-boat by destroying several key instruments and gauges, even as they rave on about the curse of the ivory talisman, but all are murdered by the venomous Altberg. His lone companion, Lieutenant Klenze, grows increasingly unstable and paranoid. Certain of their fate, the two pass the time in their drifting vessel by sweeping the sub's powerful searchlight through the dark abyss, noting that dolphins follow them at depths and for lengths previously unheard-of.
Soon after, Klenze goes completely mad, claiming that "He is calling! He is calling!" Unable to soothe his insane companion, and unwilling to join him in suicide, Altberg agrees to operate the airlock, grateful to send Klenze to an assured death in the airless, crushing pressure of the deep. Altberg, alone at last, drifts for a couple more days before his U-boat finally lands on the ocean floor, where he is amazed to see the sunken remains of an ancient and elaborate city, deciding that it is the ruins of Atlantis.
Overcome with excitement, Altberg dons a deep-sea diving suit, exploring the breathtaking, indescribable beauty of the ruined city, discovering a mysterious rock-hewn temple, amazed to find the image of the ivory carving within. He spends the next couple days in darkness as the sub's last reserves of battery power and air are expended. In the end, he acknowledges that even with his mighty "German will", he is no longer able to resist the powerful visions and auditory hallucinations, nor his madness-inspired impulse to depart his U-boat and enter the temple, now impossibly illuminated by what seems to be a flickering altar flame. Slipping on his diving suit, he releases his sealed manuscript in a bottle (which is later found on the coast of Yucatan), and goes willingly to his death.
Like Dagon, The Temple is a nautical story with a World War I background.
The theme of submerged cities with non-human worshippers recurs in Lovecraft's later works, most notably The Call of Cthulhu and The Shadow Over Innsmouth. It is subtly implied that the city Altberg finds is actually R'lyeh (from the former).
An H. P. Lovecraft Encyclopedia judges "The Temple" to be "marred by crude satire on the protagonist's militarist and chauvinist sentiments", and by "an excess of supernaturalism, with many bizarre occurrences that do not seem to unify into a coherent whole."
- http://uboat.net/wwi/boats/index.html?boat=29, story of real U-29