Le Major Sholto a jadis pris possession du trésor caché par un Rajah, avec la complicité d'un de ses hommes et les informations données par Jonathan Small, un détenu. Mais il est rentré en Angleterre avec tout le butin.
Il s'agit d'une adaptation de la pièce de théâtre éponyme écrite en 1899 par William Gillette. Dans ce film, William Gillette joue lui-même le rôle-titre de l'aventure qu'il a écrite quelques années plus tôt.
Sherlock Holmes is awakened in modern times from suspended animation as a result of an earthquake. He is aided in his recovery by Dr. Amy Winslow (Debrah Farentino), who lives in Baker Street in San Francisco. Holmes pits his wits against the descendants of the Moriarty family, led by James Moriarty Booth. He is also aided by a new group of Baker Street Irregulars led by Zapper (Mark Adair-Rios).
The film begins aboard a luxury aircraft as Dr. Gropinger (Ron Moody) (an obvious parody of Henry Kissinger) travels on a goodwill tour. He misplaces his diary and is thrown into a panic as, without the diary, he no longer knows where he is or is supposed to be next. Stepping off the plane, he is shot dead after extending greetings in Hebrew to a congregation of Arabs. Soon after, the U.S. President (Joss Ackland in a caricature of Gerald Ford) receives a threatening letter signed only "Moriarty", claiming responsibility for the death. The letter also claims Moriarty has set in motion a plan that will allow him to gain control of the world. The president dispatches a top agent to London to work with the world's top law enforcement officials and find a strategy to combat Moriarty.
The story takes place in 1913. Sherlock Holmes, virtually in retirement, is persuaded by Inspector Alec MacDonald of Scotland Yard to take on a baffling case. Three dead bodies have been found in London's East End, all with no discernible cause of death, but the expressions on their faces suggest that they all died in a state of terror.
In the beginning sequence, a former FBI agent named Carter Morstan (Barry Morse) receives an unwelcome visit by a man named Small. In the ensuing struggle, a gunshot rings. Subsequently, a body is wrapped into a carpet and set alight.
L'action débute lors d'un banquet au manoir de Sir Hugo Baskerville. La scène illustre la cruauté de Sir Hugo qui, en pleine réception, tue dans un duel à l'épée un invité, Sir Bettans, qui avait courtisé sa femme. Alors que Sir Hugo va s'en prendre à cette dernière, un chien surgit et attaque le maître de maison, le mettant hors d'état de nuire.