This is the trailer to the 2001 movie, Dagon, starring Ezra Godden. Lovecraft is admitedly hard to interpret into film, but as far as adaptations go, this one is not bad. You'll have to like the genre though in order to enjoy the movie.

At the moment, the official site seems to be offline or no longer in existence, but here is a plot synopsis from Wikipedia.com:

Two young American tourists, Barbara and Paul, seek help in a small town called Imboca on the coast of Galicia in Spain after their boat becomes shipwrecked. However, the inhabitants turn out to be far from friendly, and, as they discover, not even human, apart from a drunken tramp named Ezequiel. This latter (played by veteran Spanish actor Francisco Rabal - in what would be his last role), tells Paul how the denizens of the town have overthrown Christianity in favour of the fish god Dagon, who has brought them wealth from the sea. Since that time they have mutated into fish-like forms and are in obedience to the beautiful mermaid-like Uxia. Eerily, she has appeared to Paul in his dreams even before they met, and she saves him from being murdered by the locals. However, her plans for him, and for Barbara, unleash horror beyond all imagination.

Eventually we learn Paul's mother escaped from the town years ago, and both he and Uxia share the same father, making them half-siblings; still they are destined to be together for eternity.