"Know then the legend of the Hound of the Baskervilles." One night in the mid-18th century, Sir Hugo Baskerville was cheated of his after-dinner sport with a kidnapped farm girl, having already incinerated her father in the Baskerville fireplace. Deciding to ride the fleeing girl down, Hugo finally succeeded in killing her but was himself killed by a monstrous hound.

Some 150 years later, consulting detective Sherlock Holmes is less than impressed when the legend is recounted to him by conceited Devonshire GP Dr Mortimer. The recent death of Sir Charles Baskerville in the grounds of a derelict abbey has officially been attributed to heart failure, but Mortimer is keen for Holmes to travel to Dartmoor and resolve the various contradictions in the case. Holmes and his associate Dr Watson agree to meet Sir Charles's young nephew, Sir Henry, who has lately returned from Johannesburg and is resident at a London hotel. Discovering that Sir Charles's fortune was in the region of a million pounds, Holmes also learns that the surviving Baskerville has had a boot stolen. The remaining boot disgorges a lethal tarantula onto Sir Henry's shoulder; Holmes succeeds in killing it and arranges for Watson to accompany Sir Henry on his journey to Dartmoor.

Arriving at Baskerville Hall, Watson discovers that one of two portraits of Sir Hugo has disappeared, and the next morning is almost sucked into the Grimpen Mire before being rescued by surly tenant farmer Stapleton and his even surlier daughter Cecile. On the moor again that night, Watson is surprised to discover Holmes there, who has been observing incognito all along. Moments later, Sir Henry apparently falls prey to the legendary Hound, but Holmes deduces that the actual victim was Selden, an escaped convict who has been provided with Sir Henry's cast-off clothing by his sister - who happens to be the housekeeper at Baskerville Hall.

In rapid succession, Holmes then discovers that Bishop Frankland, a keen entomologist, has recently suffered the theft of a tarantula; that the knife used to mutilate Selden's body after death was the same one used by Sir Hugo decades before; and that a passage leading from the abbey to an obsolete set of tin mines contains a suspiciously fresh beef bone.

Noticing that Sir Henry has fallen for Stapleton's daughter, Holmes cajoles him into keeping a date with her on the moor that night. Along with Watson, Holmes then conceals himself at the abbey, observing the couple as Cecile rounds contemptuously on Sir Henry, explaining that she is the illegitimate descendant of Sir Hugo and that, along with her father, she personally supervised Sir Charles's death. Stapleton's trained hound then appears, attacking Sir Henry but desisting when shot by Holmes. Stapleton, gunned down by Watson, is savaged by the expiring hound, and the fleeing Cecile is swallowed up in the mire.

Holmes restores to the rattled Sir Henry his missing boot (stolen by Stapleton for the purpose of putting the hound on the scent), while Sir Henry gives Holmes the missing portrait - which, as Holmes suspected, reveals that Stapleton's webbed fingers were a hereditary trait shared by Sir Hugo.