In England, 1867, a young Sherlock Holmes (Hector Bateman-Harden) finds himself dropped off at a boarding school by his mother. Soon after his arrival, he becomes the target of relentless bullying from his classmates. Despite their initial attempts to befriend him, which lead to a humiliating incident involving a donkey, Sherlock decides to shut off his emotions entirely and devote his life to crime-solving. He resolves from that day forward to use his intelligence to expose the misdeeds of his peers. It’s during this time that he encounters young John Watson (Codie-Lei Eastick), setting the stage for a lifelong friendship.
Fast forward approximately 25 years, and we meet the adult versions of Sherlock Holmes, now played by Will Ferrell, and Dr. Watson, portrayed by John C. Reilly. They are on their way to the trial of Holmes's arch-nemesis, Professor James Moriarty (Ralph Fiennes). Just as the judge is about to acquit Moriarty, their housekeeper, Mrs. Hudson (Kelly Macdonald), interrupts with a package from Moriarty. Within it, they discover a potentially deadly mosquito. In a comical frenzy to eliminate the pest, Holmes attempts a calculated move to squash it, but his plan backfires, leading to a swarm of bees being unleashed.
Arriving just in time, Holmes gives a dramatic testimony, revealing that the man on trial is not actually Moriarty but a scapegoat named Jacob Musgraves, identified by his tremor—evidence of his guilt. Despite warnings from Inspector Lestrade (Rob Brydon), Holmes remains resolute about Musgraves's innocence and dismisses the impending danger of a real murderer.
Soon, Queen Victoria (Pam Ferris) invites them to Buckingham Palace where a surprise party for Holmes ensues. However, the celebration takes a dark turn when they discover a corpse concealed in a cake, paired with a chilling note from Moriarty threatening the queen's life. At the morgue, they meet an American doctor, Grace Hart ([Rebecca Hall]), and her companion Millicent (Lauren Lapkus), sparking Holmes's interest.
As the plot thickens, Holmes becomes increasingly convinced that Watson may be the very murderer they seek, leading to Watson's wrongful arrest. Overwhelmed by guilt, Holmes opens himself up emotionally for the first time in years, resulting in an extravagant musical number celebrating their friendship. Meanwhile, in a twist of fate, he uncovers the true villain is none other than Mrs. Hudson, who is working on Moriarty's orders.
The climax unfolds as Holmes races against time to save Watson, who is tied up on the Titanic, just as Mrs. Hudson prepares for her deadly plot. In a successful yet chaotic effort, they avert disaster, with the queen applauding Holmes's efforts but acknowledging Watson's crucial role.
The adventure concludes with a heartwarming moment back at home, where Holmes reveals plans to publicly recognize Watson as his co-detective. In a light-hearted closing scene, we catch a glimpse of the real Moriarty in hiding, receiving a foreboding message that Holmes and Watson are on his trail—setting the stage for further escapades.
