Sherlock Holmes investigates a haunting in a Canadian village vital to the war effort.
The townspeople of the small village of La Morte Rouge, just outside of Quebec, Canada, live in fear, as a glowing, murderous phantom has been stalking the nearby marshes. When Father Pierre goes to investigate the late-night ringing of his church's bells, he finds the murdered body of Lady Lillian Penrose clutching the bell rope. Meanwhile, Lord William Penrose is in Quebec, addressing a meeting of the Royal Canadian Occult Society about the history of the phantom. Also at the meeting are the famous English private detective Sherlock Holmes and his trusted companion, Dr. John H. Watson. After learning of Lady Penrose's death, Holmes receives a letter she had earlier sent to him, asking for his protection, so he and Watson decide to go to La Morte Rogue and investigate her murder. Holmes soon discovers that Lady Penrose was Lillian Gentry, a popular English actress who disappeared years earlier. He then questions innkeeper Emile Journet, an ex-prison guard who moved to La Morte Rogue around the time of the phantom's reappearance. That night, Holmes investigates the marsh lands where the glowing phantom has been sighted, and after encountering the "monster," Holmes finds a piece of a torn cotton shirt soaked in phosphorescent paint. Later, Holmes learns that the expensive shirt had been purchased by a retired, wheelchair-bound magistrate, Judge Brisson. While visiting the judge at his home, Holmes uncovers that Brisson is not disabled, but merely fears for his life. Brisson tells the detective that he had ordered Nora, his housekeeper, to give some of his old shirts to a boatman. Along with police sergeant Thompson, Holmes and Watson find the boatman, Jack Tanner, but he escapes their clutches by jumping out a nearby window. Holmes then learns that Lady Penrose had retired from the stage after witnessing fellow actor Alastair Ramson kill another member of their stage company. Lord Penrose tells Holmes that Ramson was believed killed in a prison break, and Holmes quickly surmizes that Tanner and Ramson are one in the same. Learning that Brisson was the judge who sentenced Ramson, Holmes rushes to the magistrate's home, only to find Brisson murdered, having been killed by Ramson, then disguised as Nora. Later, Holmes is trapped by Ramson, who confesses to killing Lady Penrose out of jealousy and Brisson out of hate, then tells the detective that he plans seek revenge on a third person. Before Ramson can divulge the name, however, Watson arrives and rescues Holmes. Holmes quickly deduces that Journet is the third man, but when he and Watson arrive at the inn, they find the innkeeper missing and his daughter Marie murdered. Holmes and Watson later find Journet hiding in Brisson's home, and they convince the innkeeper to help them trap his daughter's murderer. Holmes, disguised as Journet, wanders through the marshes, where he is attacked by Ramson, now in the guise of Potts, the postman. Holmes fights off the murderous actor, and when Ramson attempts to escape, he is killed by Journet with the same garden hoe with which he had used to slit the throats of his victims. With the case solved, Holmes and Watson head for home.