On a foggy London night in 1897, a young captain named Robert Gregg wanders Baker Street, asking a drunk and a beggar for directions to the residence of detective Sherlock Holmes. When Holmes’ silhouette appears in an upper window, the drunk quickly rises, fires a shot at Holmes, and pushes Gregg to the ground. Suddenly, the beggar leaps to his feet, overpowers the drunk, and restrains him at gunpoint. The beggar rips off his disguise to reveal his identity: detective Sherlock Holmes! Holmes whistles for police backup as Gregg and the would-be assassin look on in amazement.
In the sitting room of their jointly rented flat, Holmes explains to Dr. John Watson that he’d arranged a waxen dummy in the window as a trap for his attacker. The arrested gunman was an assassin hired by Moriarty, an organized crime boss and Holmes’ arch nemesis. The housekeeper, Mrs. Hudson, complains about the household’s bullet holes, broken glass, and other occupational hazards. Captain Gregg enters and Holmes brilliantly deduces a great deal about the man (“It’s So Simple”). Inspector Lestrade, chief of police, enters and Holmes quickly sums him up, directs him to investigate Moriarty, and summarily dismisses him.
Captain Gregg, who works as a palace guard, explains that he had written a series of embarrassing love letters to the American actress Irene Adler. Irene has since threatened to publish them, and Gregg – who is now engaged to another woman - wants Holmes to retrieve them. Though he barely gives Gregg his attention, focusing instead on the type of gold-tipped bullets Moriarty’s henchman had fired, Holmes takes the case.
At the Theatre Royal, Irene and her chorines perform an elaborate Wild West number (“Buffalo Belle”). After the show, Holmes offers Irene a hundred pounds for the letters, but she refuses. Holmes suspects that more than petty blackmail is at play.
The next day, Holmes enlists the assistance of Wiggins and the Baker Street Irregulars. The motley rogues offer to pilfer the letters from Irene Adler (“Leave It To Us, Guv”) but Holmes asks them merely to set off a smoke bomb in Irene’s flat. When she rushes out, he’ll step in and do the rest.
At Irene’s home, Wiggins and the Irregulars carry in an aging Anglican deacon, whom they claim has barely survived a carriage accident. They exit and the room suddenly fills with smoke. Suspecting a fire, Irene helps the Reverend out into the garden, and gives him several of her valuables as she attempts to save her belongings. Seeing him rifle through her papers, she realizes she’s been duped; the deacon is Holmes in disguise. Irene toys with him for a while (“Letters”) before amiably calling his bluff. Admiring his style, she offers him the letters for free. Holmes refuses, saying the fact that she offers them makes his obtaining them unnecessary. Holmes exits just as a physician, Dr. Baxter, arrives.
On the street in front of the palace, a mysterious man shows Captain Gregg the letters and threatens him with publication. Gregg offers money, but the man says he has something else in mind.
Later that day, Irene storms into Holmes’ flat and accuses him of stealing her letters. Holmes resolutely denies it, and together, they realize that that Dr. Baxter has stolen them. Watson goes out to learn more. Irene flirts with Holmes; he defends his scholarly demeanor (“The Cold, Clear World of the Intellect”) but she insists he deserves to find love (“Finding Words For Spring”). They nearly kiss, but Watson interrupts them, confirming that Baxter was a fraud. Holmes forms a plan: tonight after Irene’s show, they will explore the underworld and find this Dr. Baxter, disguised as “members of the lower class” (“What A Night This Is Going To Be”).
Holmes and Irene, in disguise, search the alleys and murky streets of London’s underworld, pursued by Murillo, a menacing giant of a man (“Underworld Ballet”). Just as they come upon Baxter, they are ambushed; three killers leap upon Holmes and drag him off. Murillo, who actually works for Holmes, grabs Irene and sends her away. She chooses to remain, however, watching Murillo kill one of the three attackers, who have returned. As the surviving two escape, Irene silently follows them.
Baxter and his henchmen take Holmes to a private yacht, where Moriarty is waiting. Holmes maintains his cockney persona for a while before revealing his identity. He knows that Moriarty was simply using Captain Gregg as a means of stealing the Queen’s Diamond Jubilee gifts. As they speak, Gregg is allowing men he believes to be reporters to accompany him into the palace. Those men, who are actually Moriarty’s henchmen, will steal the jewels and replace them with replicas.
Two goons carry Watson in, and Moriarty sets a sophisticated time bomb. He taunts Holmes for a while (“I Shall Miss You”) before leaving the two men to die.
Crowds gather in the streets of London to watch the Queen’s Diamond Jubilee Parade. Wiggins and the Irregulars, who have set up a pulley lift to the rooftops, sell tickets to the best seats in town (“Roof Space”). Irene sees the Irregulars and begs them to find and help Holmes, but they’re too busy making money.
In Moriarty’s lair, Holmes and Watson remain bound in their chairs as the parade march plays in the distance. As three of Moriarty’s henchmen stand guard, Watson wistfully remembers his late wife, Mary (“A Married Man”). Irene and the Irregulars arrive, overpower the henchmen, and free Watson. Holmes, who releases himself through a bit of physical trickery, delicately disarms the ticking time bomb. Holmes, alone and face-to-face with Irene, officiously and impersonally thanks her. Irene, frustrated by Holmes’ distant nature, is nonetheless encouraged by his continued interest (“I’d Do It Again”).
Holmes, fleetly traveling in a horse-drawn carriage, deduces that Moriarty has traveled to the Cliffs of Dover (“The Pursuit”). He finds Moriarty on the edge of a rocky cliff. The two men fight and roll over the edge together, disappearing from view.
Days later, the funeral processions for Holmes and Moriarty pass each other on a London street. Irene visits Watson in his Baker Street flat and tells him she’s returning to America. When she exits, Holmes casually strolls in and resumes a conversation with Watson. Holmes, who survived the Cliffside scuffle, has faked his own death to make Moriarty’s gang complacent.
Wiggins and the Irregulars arrive with a satchel full of Moriarty’s belongings. Holmes subjects the objects to scientific experimentation and analysis, in hopes of determining the gang’s whereabouts.
Dr. Baxter and Moriarty’s gang toast their late leader at his wake (“I Shall Miss You” Reprise). But when they open Moriarty’s coffin, they discover a mound of glittering gems (“Jewelry”). Suddenly, one of the mourners removes a disguise: it is Sherlock Holmes! He blows a whistle and the police and Irregulars arrive, arresting the criminals.
All exit except the young boy playing the funeral organ. Holmes recognizes the boy as Irene in disguise. She had seen his pipe on Watson’s desk, discerned that he was alive, and followed him to the wake. Realizing he could never love her, Irene bids Holmes farewell, telling him he is a fool for missing out on the adventure she could have offered him. As Irene leaves for America, Watson arrives, and the two men suddenly hear the recorded voice of Moriarty, who has obviously faked his death as well. Holmes vows to find him… in America. He quickly exits, following the very path Irene had just taken. Watson, left alone, knowingly smiles.