The film opens in London in the present day, where the body of Mr. Murphy [Doris Lloyd] is found on a train, seemingly a suicide but in truth murder. A secret society gathers in Limehouse, chaired by lawyer Thaddeus Merrydew [Alan Dinehart], who explains that Murphy’s death will trigger a distribution of the club’s financial interests among the surviving members, leaving Murphy’s widow with nothing. Among the attendees is Daffy Dolly [Leila Bennett], a presence who hints at the variety of personalities within the group. The stakes grow as the plot unfolds around a looming inheritance and a scheme that has slept for years.
Mrs. Murphy [Doris Lloyd] goes to 221A Baker Street to seek help from Sherlock Holmes [Reginald Owen] in extracting payment from Merrydew. She shows Holmes a pencil-written couplet from the counting-out rhyme Ten Little Indians that Murphy had received before his death. Such couplets, counted down, presage the murders that follow. Holmes tells Dr. Watson [Warburton Gamble] that Merrydew is London’s most dangerous crook and that this time Holmes intends to trap him. He also notes a coded advertisement in The Daily Telegraph that appears linked to the case.
Merrydew warns Eileen Forrester [June Clyde] not to marry her fiancé John Stanford [John Warburton] for the moment. While they converse, one of the society’s members, Captain Pyke [Wyndham Standing], bursts in and Eileen witnesses him shot through the window, an apparent accomplice terrifying her as she faints. Holmes remains skeptical of the widow’s account and the strange happenings surrounding the circle.
As the death toll among the society’s members rises, Holmes, Watson, and Inspector Lestrade [Alan Mowbray] investigate the death of Malcolm Dearing [Halliwell Hobbes]. They visit Merrydew to inquire about Murphy’s money but receive no usable answer. They pass Mrs. Pyke, who has arrived with her lawyer, and Holmes hints that the key to cracking the coded messages lies in Whitaker’s Almanack, a detail he has spotted on Merrydew’s desk.
Merrydew calls on Eileen again to invite her to another Scarlet Ring gathering. He hints that, after a five-year wait, the scheme will yield a million pounds, roughly £200,000 for each of the five remaining members. Holmes and John arrive just as the meeting ends; they smell gas and manage to rescue Eileen from a death trap. The anxious Jabez Wilson [J.M. Kerrigan] then seeks Holmes’s assistance after a dangerous attempt on his life.
Will Swallow [Billy Bevan] and the other members are lured to The Grange, the Pyke mansion at Shoeburyness, now on sale by Mrs. Pyke [Anna May Wong]. Holmes, Lestrade, and the police close in, surrounding the manor and story’s tension explodes into action. The killer is unmasked as Captain Pyke [Wyndham Standing], whose death had been faked, and he is arrested for three murders. Mrs. Pyke is also taken into custody as an accomplice. Merrydew arrives with the gems and is arrested as an accomplice. Eileen and John depart happily, leaving Holmes content that London has been freed of yet another master criminal.
