Several centuries later, the death of Sir Charles Baskerville is being reported by his best friend, Dr. Richard Mortimer (Francis de Wolff), to Sherlock Holmes (Peter Cushing) and Dr. Watson (AndrÃ© Morell), who are willing to meet the new owner of Baskerville Hall, Sir Henry (Christopher Lee). After meeting Sir Henry, Holmes remembers that he is going to be away on another case when Sir Henry returns to Baskerville Hall. Holmes puts Watson in charge of watching over Sir Henry. A tarantula attacks Sir Henry briefly in London; Holmes suspects foul play. Before he leaves, Holmes reminds Watson not to let Sir Henry go out onto the moor after dark.
On the way to Baskerville Hall, the coach driver, Perkins (Sam Kydd), warns that a convict named Selden (Michael Mulcaster) has escaped from nearby Dartmoor Prison two days ago. Watson remembers the case: Selden was convicted of murdering a number of street women; due to his being found insane, he was sentenced to life imprisonment instead of hanging. At Baskerville Hall, Watson and Sir Henry learn from the butler, Barrymore (John Le Mesurier), that one of the two paintings of Sir Hugo was stolen several months ago. Watson then inquires Barrymore about further details of Sir Charles's death since Barrymore was the first to discover the body. Barrymore explains that he was on his way to warn Dr. Mortimer of Sir Charles's disappearance and then found the body by chance.
The next day, Sir Henry and Watson meet the friendly local pastor, Bishop Frankland (Miles Malleson), who is also a keen entomologist. After leaving instructions at the post office in town, Watson meets a man named Stapleton (Ewen Solon) and his daughter Cecille (Marla Landi), who save him from sinking into quicksand in the Grimpen Mire. Cecille seems to act strangely around both Sir Henry and Watson. At night, Watson sees a light shining upon the moor. He and Sir Henry investigate the mysterious light. While they are out on the moor, a strange man rushes by them. Watson and Sir Henry pursue him, but he gets away from them. The Baskerville hound howls, causing Sir Henry to suffer a minor heart problem. A figure is silhouetted on a hill in the distance. Watson helps Sir Henry back to Baskerville Hall.
Soon, Watson discovers that the silhouetted figure was Holmes; Holmes had arrived hours after Watson did. They find out that the convict Selden, who is actually Barrymore's brother-in-law, was the one signalling with the light the other night and that Barrymore and his wife were the ones returning the signal. The hound has mistakenly killed Selden because Selden was wearing Sir Henry's clothes, given to him by his sister, Barrymore's wife (Helen Goss). Holmes then questions Bishop Frankland about a certain tarantula that the bishop had missed last Thursday and deduces that it may have been the same one encountered in London. Holmes is almost trapped inside the old tin mine while investigating.
Cecille takes Sir Henry out to the moor one night. By now, Holmes has solved the case: The Stapletons are illegitimate descendants of Sir Hugo and are next in line to inherit the Baskerville fortune and mansion if all of the Baskervilles perish. Holmes deduces this after questioning Barrymore about the missing portrait; it was stolen because it revealed Sir Hugo's right-hand fingers were webbed just like Stapleton's right hand. Cecile has taken Sir Henry out onto the moor so that he may be killed by the hound â a dog kept by Stapleton, not a ghost as many were led to believe. Holmes and Watson rush out just in time to hear Cecile reveal her intentions to a horrified Sir Henry. The dog attacks Sir Henry. Stapleton attacks Watson with the legendary curved dagger used by Sir Hugo and is shot and wounded by Watson. Holmes shoots the dog; it then turns on Stapleton and mauls him to death. Cecille flees after Holmes kills the beast, revealing it to be a Great Dane wearing a hideous mask to make it look more terrifying. Cecile accidentally falls into the mire and slowly sinks to her death. Holmes and Watson take a shocked Sir Henry back to Baskerville Hall.
Who reports the death of Sir Charles?
His best friend, Dr. Richard Mortimer