Des meurtres semblables à ceux attribués à Jack l'Éventreur sont commis à Madrid. Holmes (Gary Piquer), qui est sujet à des rêves prémonitoires au cours desquels il entrevoit la survenue de ces meurtres, décide de se rentre à Madrid pour enquêter sur l'affaire en compagnie du Docteur Watson (José Luis García Pérez) marié depuis peu à Mary Morstan (Leticia Dolera).
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.
Master criminal Giles Conover (Miles Mander) steals the famous "Borgia Pearl" from the Royal Regent Museum under the very nose of Holmes and Watson, but when caught the pearl is not found on him and he is released.
The film is divided into two separate, unequal stories. In the shorter of the two, Holmes is approached by a famous Russian ballerina, Madame Petrova (Tamara Toumanova), who proposes that they conceive a child together, one who she hopes will inherit her physique and his intellect. Holmes manages to extricate himself by claiming that Watson is his lover, much to the doctor's embarrassment.
Sherlock Holmes (Basil Rathbone) and Dr. John Watson (Nigel Bruce) receive a visit from Dr. James Mortimer (Lionel Atwill), who wishes to consult them before the arrival of Sir Henry Baskerville (Richard Greene), the last of the Baskervilles, heir to the Baskerville estate in Devonshire.
Several centuries later, the death of Sir Charles Baskerville is being reported by his best friend Dr. Richard Mortimer (Francis de Wolff) to Sherlock Holmes (Peter Cushing) and Dr. Watson (André Morell), who are willing to meet the new owner of Baskerville Hall, Sir Henry (Christopher Lee). After meeting Sir Henry, Holmes remembers that he is going to be away on another case when Sir Henry returns to Baskerville Hall. Holmes puts Watson in charge of watching over Sir Henry. A tarantula attacks Sir Henry briefly in London; Holmes suspects foul play. Before he leaves, Holmes reminds Watson not to let Sir Henry go out onto the moor after dark.