Sherlock Holmes gets in trouble with his landlady Mrs. Hudson for not paying his rent. Holmes’ friend, Dr. Stamford, suggests Holmes get a flatmate and sends Dr. John Watson, whom Holmes deduces is a retired army doctor. Mrs. Hudson is impressed enough to allow Watson to become Holmes’ flatmate. Inspector Lestrade of Scotland Yard arrives and arrests Holmes for suspicion of murdering Count Drebber.

Sherlock is frustrated because he thinks there’s a mastermind behind the Noahtic and Drebber cases whose identity eludes him. Returning on a train after an unsatisfying investigation into another aristocrat’s death, he happens to meet William again.

Military Intelligence Service Director Mycroft orders Albert to recover classified papers that could rock the nation, and kill the woman who stole them. Sherlock is hired by the king of Bohemia to pursue Irene Adler, who threatens the king’s wedding plans.

Following William’s plan, Albert invites Irene to a masquerade, where a game with the famed “Lord of Crime” as its theme is being played. Dressed as a man, Irene uses the game to contact Albert, pleading for her safety in return for the stolen papers.

Despite Sherlock recognizing that Irene is dealing with the Lord of Crime, he sees her off. Irene negotiates with the Lord of Crime in an abandoned church, but before she can turn over the papers, Sherlock arrives, and makes a deal to keep Irene safe.

John introduces Sherlock to Mary, his fiancée. A stunned Sherlock realizes that Mary has another concern. She produces six pearls, detailing their connection to her missing father. She asks Sherlock to look into the matter, but is holding something back.

Milverton blackmails Mary, exploiting her dalliance in antigovernment activities as a student. Sherlock decides to sneak into Milverton's estate to steal his evidence, but even that act was anticipated. Sherlock finds that he is not the only trespasser.

When William James Moriarty claims responsibility for being the Lord of Crime in all the papers, aristocratic condemnation and public anger falls upon the Moriartys. The final problem of the Moriarty Plan that William has concocted at long last begins.