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In turn-of-the-century London, a group of Scotland Yard's best investigators meet to discuss the fourth in a series of murders of young women, which have become known as the "finger murders" as each victim is found with one finger severed. Inspector Gregson, in charge of the investigation, informs his men that due to rising public concern about the murders, he intends to bring famed private detective Sherlock Holmes in on the case. Holmes and his partner, Dr. John Watson, meet Gregson at the morgue to examine the latest victim and then go to the Pembroke House club to discuss the case. While there, Holmes notices Sir George Fenwick in the company of an attractive woman, Lydia Marlowe. Shortly afterward, Fenwick and Lydia depart for her apartment, where Fenwick is unknowingly drugged and hypnotized by Lydia with the help of her maid. The next day Fenwick awakens in a strange boardinghouse, groggy and confused, and hears from news vendors on the street that another "finger murder" has been committed. To his horror, Fenwick finds a severed finger in his pocket. When he returns to Lydia's to inquire about the previous night, he is met by a stranger, who unknown to him is the notorious Professor Moriarty. Moriarty informs Fenwick that he has recovered incriminating letters suggesting Fenwick is involved in the latest "finger murder." The following day Holmes and Watson receive a visit from Maude Fenwick, who confesses that her father has been behaving strangely and that she discovered he had buried a human finger in their garden. When Holmes and Watson accompany Maude back to her home to question her father, they find Fenwick dead, clutching a matchbook from the Pembroke House. Later, Holmes concludes Fenwick was being blackmailed, as the day before he had removed a large sum from his bank. Back at his flat, Holmes speculates that while all the murders appear to have been committed by different killers, they all bear the mark of Professor Moriarty, despite the report of his death in Montevideo. Watson remains skeptical and shortly afterward is called away by a request for his medical services. A few moments later, Moriarty slips into the flat and warns Holmes not to pursue his investigation of the murders. After Moriarty departs and Watson returns, Holmes notes the apartment across the way has gone dark and sends Watson to investigate. The doctor arrives at the opposite flat just in time to see a sniper shoot Holmes through the window. Holmes, however, has followed Watson after setting up a bust as his double. Upon questioning the sniper, Corporal Williams of the British Army, Holmes and Watson note that he appears hypnotized and take him to Scotland Yard. There Holmes informs Gregson that all the murders are accomplished by hypnosis and that Williams is the key to identifying the mystery woman involved. After Williams is mysteriously murdered just outside the police station, Holmes and Watson attend a meeting of the Mesmer Club, which is run by the country's top hypnosis expert, who then proceeds to hypnotize the doubting Watson. Lydia, under instruction from Moriarty to lure Holmes to her apartment, shows up at the club and Holmes invites her to the Pembroke House, where Lydia claims not to recall her evening with Fenwick. Later at her apartment, Lydia drugs and hypnotizes Holmes, and Moriarty appears and tests the effectiveness of the hypnosis by having an assistant run a knife blade along Holmes's neck. Confident the detective is completely hypnotized, Morarity orders him to write a suicide note, then go onto the terrace ledge to throw himself off. Watson and Gregson burst in and Holmes reveals that he was only pretending to be hypnotized, having substituted Lydia's drug with a painkiller. As Lydia and Moriarty are handcuffed and about to be led away, Moriarty breaks away and attempts to jump across to the neighboring terrace, but instead falls to his death.