In 1891, Irene Adler delivers a package to Dr Hoffmanstahl; payment for a letter he was to deliver. Hoffmanstahl opens the package, triggering a hidden bomb that is prevented from detonating by the intervention of Sherlock Holmes. Holmes takes the letter and disposes of the bomb while Adler and Hoffmanstahl escape. Holmes later finds Hoffmanstahl assassinated. Adler meets with Professor Moriarty to explain the events, but Moriarty poisons and kills her — deeming her position compromised by her love for Holmes.
Some time later, Dr Watson arrives at 221B Baker Street, where Holmes discloses that he is investigating a series of seemingly unrelated murders, terrorist attacks and business acquisitions that he has connected to Moriarty. Holmes meets with a French Manouche fortune-teller Simza, the intended recipient of the letter he had taken from Adler, sent by her brother Rene. Holmes defeats an assassin sent to kill Simza, but she flees before Holmes can interrogate her. After the wedding of Watson and Mary Morstan, Holmes meets Moriarty for the first time. Moriarty informs Holmes that he murdered Adler and will kill Watson and Mary if Holmes' interference continues.
Moriarty's men attack Watson and Mary on a train to their honeymoon. Holmes, having followed the pair to protect them, throws Mary from the train into a river below where she is picked up by Holmes' waiting brother, Mycroft. After defeating Moriarty's men, Holmes and Watson travel to Paris to locate Simza. When she is found, Holmes tells Simza that she has been targeted because Rene is working for Moriarty, and may have told her about his plans. Simza takes the pair to the headquarters of an anarchist group to which she and Rene had formerly belonged. They learn that the anarchists have been forced to plant bombs for Moriarty.
The trio follows Holmes' deduction that the bomb is in the Paris Opera. However, Holmes realises too late that he has been tricked and that the bomb is in a nearby hotel; the bomb kills a number of assembled businessmen. Holmes discovers that the bomb was a cover for the assassination of Meinhard, one of the attendees, by Moriarty's aide, Sebastian Moran. Meinhard's death grants Moriarty ownership of Meinhard's weapons factory in Germany. Holmes, Watson and Simza travel there, following clues in Rene's letters.
At the factory, Moriarty holds Holmes hostage and tortures him while Watson is under sniper fire from Moran. Holmes deduces Moriarty's plot, revealing that the Professor secretly acquired shares in multiple war profiteering companies, and intends to instigate a world war to make himself a fortune. Meanwhile, Watson uses the cannon he had been hiding behind to destroy the watchtower in which Moran is concealed. The structure collapses into the warehouse where Moriarty is holding Holmes captive. Watson, Simza, and an injured Holmes reunite and escape aboard a moving train. Holmes deduces that Moriarty's final target will be a peace summit in Switzerland, creating an international incident.
At the summit, Holmes reveals that Rene is the assassin and that he is disguised as one of the ambassadors, having been given radical reconstructive surgery by Hoffmanstahl. Holmes and Moriarty, who is also in attendance, retreat outside to discuss their competing plans. Watson and Simza find Rene and stop his assassination attempt, but Rene is himself killed by Moran. Outside, Holmes reveals that during an earlier encounter, he replaced Moriarty's personal diary that contained all his plans and financing with a duplicate. The original was sent to Mary in London, who decrypted the code using a book that Holmes had noticed in Moriarty's office during their first meeting. Mary passes the information to Inspector Lestrade who seizes Moriarty's assets, financially crippling him. Holmes and Moriarty anticipate an impending physical confrontation, and both realize Moriarty will win due to Holmes' injured shoulder. Holmes instead tackles Moriarty over the balcony and into the Reichenbach waterfall below. The pair are presumed dead.
Following Holmes' funeral, Watson and Mary prepare for their belated honeymoon when Watson receives a package containing a breathing device of Mycroft's that Holmes had noticed before the summit. Contemplating that Holmes may still be alive, Watson leaves his office to find the delivery man. Holmes, having concealed himself in Watson's office, reads Watson's memoirs on the typewriter and adds a question mark after the words "The End".
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