In 1890 London, private detective Sherlock Holmes and his partner Dr. John Watson prevents the ritualistic murder of a woman by Lord Henry Blackwood, who has killed five other young women similarly. Inspector Lestrade and the police arrest Blackwood. Three months later, Watson is engaged to Mary Morstan and moving out of 221B Baker Street; while he enjoys their adventures together, Watson looks forward to not having to deal with Holmes’ eccentricities. Meanwhile, Blackwood has been sentenced to death and requests to see Holmes, whom he warns of three more unstoppable deaths that will cause great changes to the world. Blackwood is subsequently hanged.
Holmes is visited by Irene Adler, a former adversary who asks him to find a missing man named Luke Reordan. After her departure, Holmes follows her as she meets with her secret employer, and only learns that the man is a professor and that he intimidates Adler. Meanwhile, sightings of a living Blackwood and the discovery of his destroyed tomb lead to the belief that Blackwood has risen from his grave. Reordan is found dead inside Blackwood’s coffin. Following a series of clues from the body, Holmes and Watson find Reordan’s home and discover experiments attempting to merge science with magic. After they survive a battle with Blackwood’s men who attempt to destroy the lab, Holmes is taken to the Temple of the Four Orders, a secret magical fraternity with considerable political influence. The leaders—Lord Chief Justice Sir Thomas Rotheram, U.S. Ambassador Standish, and Home Secretary Lord Coward—ask Holmes to stop Blackwood, a former member of the society and Sir Thomas’s secret illegitimate son.
That night, Sir Thomas drowns in his bath as Blackwood watches, and the next night Lord Coward calls a meeting of the Order. He nominates Blackwood to take command in place of Sir Thomas and Blackwood reveals himself to the group, explaining his intention to bring America back under British rule. Standish attempts to shoot Blackwood but bursts into flames when he pulls the trigger of his gun and runs out a window to his death. Lord Coward issues an arrest warrant for Holmes, causing him to go into hiding. Holmes studies the rituals of the Order and recognizes their symbols in Blackwood’s murders that were staged at specific locations; from this, he deduces the targets of the final murder are the members of Parliament. With the aid of Lestrade, Holmes fakes his arrest and is taken to see Coward, where he uses evidence on Coward’s clothes to deduce Blackwood has conducted a ceremony in the sewers beneath the Palace of Westminster.
Holmes escapes and he, Watson, and Adler find Blackwood’s men in the sewers guarding a device based on Reordan’s experiments, designed to release cyanide gas into the Parliament chambers and kill all but Blackwood’s supporters, whom he has secretly given an antidote. Blackwood comes before Parliament and announces their impending deaths, then attempts to activate the cyanide device by remote control, but it is disabled by Adler. Blackwood flees Parliament and sees Adler and Holmes in the sewers, and pursues them to the top of the incomplete Tower Bridge. Blackwood fights Holmes, as the latter deduces how all of Blackwood’s supposed supernatural feats were the work of science and trickery. Blackwood plummets off the bridge and falls entangled in a noose of chains, killing him when the chain wrapped around his neck hangs him. Adler explains to Holmes that her employer is Professor Moriarty, and she warns that Moriarty is not to be underestimated, and “just as brilliant” as Holmes and “infinitely more devious”.
As Watson moves out of 221B, the police report to him and Holmes that a dead officer was found near Blackwood’s device. Moriarty used the confrontations with Adler and Blackwood as a diversion while he took a key component, based on the infant science of radio, from the machine. Holmes looks forward to the new case and new adversary.