Put an adult fish (at least age 20) in the isolation tank (that small tank at the bottom), then drag another adult fish to it. You should see the status of the fish in the isolation tank change to "Pregnant."

If the fish isn't adult, or if it's sick, you can't breed it.

There is a lot of helpful information in the "Instructions" HTML file that comes with the game, or you can read them here.
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Barbara
Unicorn
Last Day of Work