Based on a play by William Gillette, the famous detective and his friend Dr. Watson help a young woman whose brother is murdered, and they manage to stop a major crime being committed by Professor Moriarty.
In a courtroom Professor Moriarty (George Zucco) is found not guilty reluctantly by the jury, and he is discharged by the judge. Sherlock Holmes (Basil Rathbone) comes in and tells the judge he can destroy Moriarty’s alibi, but it is too late; he cannot be tried again.
Outside Moriarty offers Holmes a ride in a taxi during rain. Holmes says he admires Moriarty’s brain. Moriarty tells Holmes he will break him by committing a crime under his nose. They say goodnight at the lodgings of Holmes.
Moriarty examines his indoor plants, and his butler Dawes tells him he has a visitor. Bassick (Arthur Hoyl) comes in, and Moriarty tells him to post a letter and then wait for him. Bassick is worried, but Moriarty intimidates him. Moriarty says his plan depends on the brain of Holmes. He will distract him with two toys. One is the letter, and the other is a drawing of a man with a bird. The letter is addressed to Ronald Ramsgate. Bassick leaves, and Moriarty complains to Dawes that he has not been watering his flowers. Moriarty says he should be tortured and sends him away.
Holmes is playing scales on a violin while watching flies in a glass. The maid has the boy Billy (Terry Kilburn) wearing an apron as he sweeps. She lets Dr. Watson (Nigel Bruce) in, and he laughs at what Billy is wearing. Watson knocks and is welcomed by Holmes, who reads a letter he received from Ann Brandon about an invitation to Lady Conyngham’s garden party. Holmes says Moriarty will come to him. Watson asks about the fiddle, and Holmes says he is trying to find a note to annoy a housefly. They hear a knock, and Holmes lets in Ronald Ramsgate (Henry Stephenson), constable of London. He shows the letter to Holmes who reads about the Star of Delhi, a famous emerald. Ramsgate asks Holmes to be there when the jewel is delivered, and he agrees. Ann Brandon (Ida Lupino) comes in and tells Holmes she was followed there. Ramsgate leaves after shaking hands with Holmes. Ann tells Holmes she had to see him. She says her brother insists on her going to the garden party. Ann says she is frightened of murder. Holmes has her sit down, and she shows Holmes the drawing of the man with the bird. Holmes looks at it with his magnifying glass, seeing May 11, today’s date, on it. Ann says her father received such a note before he was murdered exactly ten years ago. Holmes asks her about that date, and she says her father was a self-made man. A knock is heard, and Jerrold Hunter (Alan Marshal) comes in. He tells Ann she should not have come there. He apologizes for intruding and says the note was put in his keeping. Watson says it has to do with murder. Hunter says it is a joke. Holmes asks about her father’s murder. Hunter says he will send him a check for his fee. Holmes says he has not taken the case. Ann and Jerrold discuss what to do, and Holmes says he will accept her case. She tells Jerrold to go, and he leaves. Holmes asks if he can keep the note, and she says Jerrold is her fiancé. Holmes asks her to go with him to a museum. Billy comes in, and Holmes asks him to get him a cab and to escort Ann out. Watson warns Holmes not to get involved in that case because he is to guard the Star of Delhi.
At the Museum of Natural History Holmes asks Ann if her father had enemies. She says she has always trusted Hunter. Holmes asks her about Moriarty, but she does not know him.
Watson goes to the office of the solicitor Hunter and sees Moriarty coming out. Watson follows him to a cab. Inside Lloyd Brandon (Peter Willes) tells Jerrold he must do something about that man. He has not slept because of the note. He is afraid the man is going to kill him. Jerrold tells him to go home and go to bed. Lloyd agrees and asks Jerrold to come with him. Jerrold says he cannot. Lloyd says he will walk home and leaves. Jerrold puts a pistol in his pocket.
Holmes tells Ann about the albatross. She is reminded of the poem about water everywhere with not a drop to drink. Holmes says it is a cryptic warning about impending death, and says they must go to her brother.
In the taxi Watson tells Holmes and her that he saw Moriarty. Ann asks Holmes not to condemn Jerrold quickly because he is a good man. Holmes says Watson is a bungler but pats him on the shoulder.
Lloyd is walking on a street and is seen by Bassick. Jerrold is walking too. In the fog Lloyd walks through a park. A cry is heard, and police hear it. Holmes and Ann arrive where a crowd is gathered, and they learn that a man is dead. She sees it is Lloyd.
Holmes carries Ann to a house where police let him in. Holmes finds Hunter and the Inspector Bristol (E. E. Clive). Jerrold says he did not kill Jerrold, but Bristol says they found him with the body and the gun that killed him. Bristol wants to arrest him, but Holmes says that Brandon was strangled to death. Bristol goes out, and Holmes explains about the case. Holmes says Hunter is the obvious suspect because he is about to marry Ann Brandon. She comes in and speaks to Jerrold. She wonders if they want to kill her too. Jerrold says he lost him for a moment but was not far behind. Ann says he is lying. She asks him to tell them who killed him. Watson speaks up, but Holmes pushes him out the door. He tells Watson he did not want Hunter to know about Moriarty so that he might lead them to him. Bristol tells Holmes he saw the body, but he is going to arrest Hunter and question him. Holmes prefers not to go because he wants to examine the scene of the crime. Holmes suggests that the Inspector let Hunter be at large while they watch him. Holmes agrees to work on the case in his usual way, and Bristol agrees. He tells Hunter he is free to go, and Jerrold embraces Ann. She says she has to believe him. She asks why he tried to keep her from seeing Holmes and why he followed Lloyd with a pistol.
In the fog Watson tells Holmes he found it, and he lays in the street. A man passing by asks if he wants a doctor. Watson says he is a doctor and that he is dead. Holmes calls Watson and shows him footprints from a club-foot used in an unusual way. They discuss possibilities. Holmes find a branch that was torn off and a chinchilla charm.
At home Ann grieves over the covered body of her brother. She looks out the window and sees someone standing in the garden. She screams, and he leaves on a taxi. Holmes and Watson come running in, and Ann tells them she heard music from the street, music she had heard when she was a girl in South America the night her father was killed. He asks what she saw, and she says she saw a figure. He asks if she remembers the melody, and he has her to play it on the piano. She is tired and asks Holmes to leave.
At home Holmes is plucking his violin and making notes. Billy knows that chinchillas are in South America. Watson asks Holmes why he is wasting his time. Holmes gives Billy six pence for figuring that out. Billy leaves. Holmes tells Watson that it is an ancient Inca funeral dirge. Watson lets in Ramsgate, who asks about the note. Holmes learns the jewel is arriving tomorrow night. Ramsgate says he cannot leave it out overnight. He asks Holmes to be at the Tower tomorrow night at ten. Holmes says he will have police there. Ramsgate thanks him and leaves. Outside he greets Ann, and she goes in.
Ann hands Holmes the drawing like the one her brother got. She says she just got it. The date May 13 is on it, and Holmes warns her about going to Conyngham’s party on that date. She cannot bear the suspense, and so Holmes urges her to go to the party, just make an appearance and walk through the grounds. She agrees. She admits she is afraid, but she will go through with it. She leaves. Holmes asks Watson to guard the jewel.
Moriarty is being shaved by Dawes and calls him a coward. Dawes says he looks younger without his beard. Moriarty gives him the evening off because he is not coming back that night.
Outside Moriarty gets in Bassick’s taxi. Bassick says the jewel is arriving tonight.
Mrs. Conyngham welcomes Ann to her party and says she was frightened. She invites Ann to stay there for the weekend. A man sings “Beside the Seaside.” Tony Conyngham offers to get a drink for Ann. The singer tells Ann they had an appointment, and she realizes it is Holmes in disguise. He sends her back. Tony brings Ann a drink, and she notices a South American musician.
In the Tower of London Watson tells Ramsgate that Holmes will be there soon. Police arrive and report to Watson, asking for his identification. Moriarty in uniform shows his to Watson. A navy escort comes to report to Ramsgate, and they are let in. The captain hands the emerald to Ramsgate who thanks him. The navy guard leaves. Ramsgate walks in to the crown jewels. He uses the key to unlock the chamber. Just then the lights go out. The police have left. Watson picks up the Star of Delhi and hands it to Ramsgate. They are relieved. Ramsgate puts the emerald with the crown jewels and locks them. A policeman with a flash light enters the chamber of the crown jewels and takes out a bag.
Mrs. Conyngham tells Ann to go to bed. Ann notices it is 11:53. They walk upstairs, and Ann says she will try to sleep late. She goes in a room and locks the door. At a mirror she hears something and goes out on the balcony. Then she runs out of the room, and the butler tells her a gentleman is there to see her. She says it is Holmes and goes down to the garden. Jerrold greets her, saying he wants her to be safe. He says she is afraid of him, and he implies he might hurt her. She runs from him, and he goes after her. Jerrold is knocked down. Holmes examines the ground with a flashlight. Ann hears someone approaching and runs off. Three policemen arrive. Ann is running through the bushes. She sees the musician and screams. He swings a bolero, but Holmes pushes her down. The bolero decapitates a statue. Holmes with a pistol shoots the running musician in the back. Watson runs over and asks Holmes if he is all right. Holmes says the bolero killed Lloyd. They find the murderer, and Watson says he is badly hurt. Bristol asks if he can be moved, and Watson says yes. Holmes says the club-foot was clever but not clever enough. Holmes says they have just begun.
Holmes and Watson enter the greenhouse, and Watson is told to stay in the lily pond. Holmes goes inside and then tells Watson nobody is there. Holmes realizes that Moriarty was shaved. He finds a guidebook and the page on the Tower of London. Holmes says his attention was diverted for some purpose. Holmes says a great crime is occurring now. Holmes realizes Moriarty must be after the crown jewels. They hurry to a taxi and take it.
Holmes drives the taxi. A man in a police uniform is still stealing the jewels. Outside the taxi tips over. While guards rescue Watson, Holmes has slipped inside. The thief hears him and steals more jewels. Holmes with his gun goes up stairs. The thief comes out with a gun and hides on the stairs. Holmes sees him, and they both climb stairs. The thief hides and shoots at hiding Holmes. Others hear the shot and head for the Tower. Holmes runs up to the roof and hides. The thief comes out on the roof. Holmes jumps down on him, and they struggle. The thief fires the gun, and Holmes hits him. Finally he knocks the man off the roof.
At a restaurant Watson reads in the paper and tells Holmes that Hunter and Ann were married. Watson asks how Hunter became involved. Holmes says he was protecting Ann. Holmes plucks his violin. Watson takes his newspaper and kills a fly, and Holmes says he was effective.
This mystery demonstrates the usual skill of Sherlock Holmes and his comradery with Dr. Watson in overcoming his fiendish nemesis, Moriarty.