Inspector Lestrade arrives at Baskerville Hall to help the detectives. In the evening, the three organize surveillance near the Stapleton house. Watson sees that Jack Stapleton has already released the dog - a huge Great Dane with a muzzle smeared with phosphorus - just before Sir Henry left. The dog attacks Henry and almost bites him to death, but Lestrade kills the dog with several shots. Stapleton, however, hides. The detectives search his house, find a tied-up Beryl and bring her to consciousness. The woman says that Jack can only hide in the center of the Grimpen Mire, where he kept the dog. There, Holmes finds all the evidence: Sir Henry's boot stolen to set the dog on, the remains of Dr. Mortimer's dog Snoopy, and phosphorus. A shot is heard, and a shootout with Stapleton begins. Escaping from pursuit, Stapleton drowns in the mire.

The events of the film take place in 1889. Sherlock Holmes and Dr. Watson are visited by country doctor Mortimer, who visited the detective's apartment the day before in his absence and forgot his cane there. Mortimer tells the legend of the Baskerville Hound, a hellish hound that has been haunting the Baskerville family of Devonshire for centuries, and reports the mysterious death of Sir Charles Baskerville, the owner of the Baskerville Hall estate. The newspapers write that Charles Baskerville's death was caused by a heart attack, allegedly he was very unwell, but Mortimer does not believe a word of them, since he found traces of a huge dog near the body of the deceased. Most of all, the doctor is worried about Henry Baskerville, the nephew and sole heir of Baskerville Hall, who has just arrived from Canada. Suspecting something fishy in this story, Holmes decided to take up the case.