Sherlock Holmes (Basil Rathbone) and Dr. John Watson (Nigel Bruce) receive a visit from Dr. James Mortimer (Lionel Atwill), who wishes to consult them before the arrival of Sir Henry Baskerville (Richard Greene), the last of the Baskervilles, heir to the Baskerville estate in Devonshire.
Dr. Mortimer is anxious about letting Sir Henry go to Baskerville Hall, owing to a supposed family curse. He tells Holmes and Watson the legend of the Hound of the Baskervilles, a demonic dog that first killed Sir Hugo Baskerville (Ralph Forbes) several hundred years ago (seen in flashback) and is believed to kill all Baskervilles in the region of Devonshire.
Holmes dismisses it as a fairy tale, but Mortimer narrates the events of the recent death of his best friend, Sir Charles Baskerville, Sir Henry's uncle. Although he was found dead in his garden without any trace of physical damage, Sir Charles's face was distorted as if he died in utter terror, from heart failure. He alone had noticed footprints at some distance from the body when it was found; they were the paw marks of a gigantic hound.
Holmes decides to send Watson to Baskerville Hall along with Sir Henry, claiming that he is too busy to accompany them himself. Sir Henry quickly develops a romantic interest in Beryl Stapleton (Wendy Barrie), the step-sister of his neighbour Jack Stapleton (Morton Lowry), a local naturalist. Meanwhile, a homicidal maniac (Nigel De Brulier), escaped from Dartmoor Prison, lurks on the moor.
Holmes eventually makes an appearance, having been hiding in the vicinity for some time making his own investigation. An effective scene, not in the original book, occurs when Watson and Sir Henry attend a seance held by Mrs. Mortimer (Beryl Mercer). In a trance, she asks, "What happened that night on the moor, Sir Charles?" The only reply is a lone howl, possibly from a hound. After some clever deception by Holmes, it is revealed that the true criminal is Stapleton, a long-lost cousin of the Baskervilles, who hopes to claim their vast fortune himself after removing all other members of the bloodline.
Stapleton kept a huge, half-starved, vicious dog (played by a Great Dane) trained to attack individual members of the Baskervilles after prolonged exposure to their scent. However, when the hound is finally sent to kill Sir Henry Baskerville, Holmes and Watson arrive to save him just in time. They kill the hound, and Stapleton flees. Holmes says ominously, "He won't get very far. I've posted constables along the roads and the only other way is across the Grimpen Mire." Holmes is praised for his work on the case, and he turns in.
Who is the true criminal?
Stapleton