Dr. John H. Watson, Robert Duvall, begins to doubt his friend Sherlock Holmes, Nicol Williamson the legendary private detective, growing concerned that Holmes is slipping into delusion—especially regarding the idea that the famed mathematician Professor James Moriarty, Laurence Olivier, might be a criminal mastermind as a result of Holmes’s cocaine habit.
Moriarty visits Watson to complain about being harassed by Holmes and explains that he was the tutor of Sherlock and his brother Mycroft until “the tragedy” happened. When Watson asks about the tragedy and mentions that Holmes has never spoken of his youth, Moriarty is shocked and abruptly leaves, unwilling to reveal more.
After Watson reads a Lancet article about drug addiction by Sigmund Freud, Alan Arkin in the role of Freud, he enlists Mycroft’s help to lure Holmes to Vienna for treatment. While Holmes is away, Mycroft visits Moriarty and subtly pushes him to travel to a specified address in Vienna, hinting at their shared past without saying too much.
Holmes, who had previously ensured Moriarty would leave a trail of vanilla scent, summons Watson and the bloodhound Toby to follow the scent. The chase leads them by cab and train to Vienna, right to Freud’s office. A startled Holmes, who had not known Freud beforehand, quickly recognizes him as a brilliant physician with radical ideas and agrees to seek help for his addiction.
Freud begins a program of rehabilitation, and uses hypnosis to ease Holmes through the withdrawal. As Holmes improves, Freud confesses that the core wound driving his addiction may still lie buried, and that a full recovery will require uncovering the root cause.
When Lola Deveraux, Vanessa Redgrave in the title role, attempts to jump from a bridge, Freud accompanies Holmes and Watson to the hospital. Freud explains that he helped Deveraux overcome her addiction months earlier, but she seems to have relapsed. Holmes, however, deduces that she was kidnapped and drugged against her will, fled her captors, and, upon realizing she is again addicted, tries to end her life. The trio witnesses Deveraux’s resilience, and Holmes remains deeply intrigued by her.
Following clues that Deveraux remembered about her kidnapping, the three pursue a suspect into a trap involving Lipizzan horses. They escape, but Holmes realizes the trap was designed to buy time for another kidnapping attempt. The culprit is her lover, Baron Karl von Leinsdorf, Jeremy Kemp. Deveraux also notices that he speaks too openly and lays down a trail of lilies that leads them to a brothel where they encounter Freud and piece together more of the mystery. Freud deduces that Deveraux was once known to work as a prostitute, but she is not there; they instead find a murdered nurse from the hospital and confront the suspect who is forced to admit the truth: von Leinsdorf gambled with Amin Pasha, the Ottoman Empire’s premier, and lost. Pasha, taken with Deveraux, has used blackmail to force the Baron into kidnapping her for his private harem.
Realizing that the trio is closing in on a train headed for Istanbul, they hijack another locomotive and chase it down. Holmes confronts von Leinsdorf in a duel and kills him, while Freud uses force to compel the Pasha to release Deveraux.
Back home, Freud hypnotizes Holmes once more to uncover the deeper reason behind his addiction. The revelation shows that Moriarty had an affair with Holmes’s mother, and his father killed her. Shocked, Freud and Watson decide not to tell Holmes what they learned when he wakes.
In the final turn, Holmes leaves Watson and boards a steamer bound for Budapest, where he is surprised yet heartened to encounter Deveraux, who seems to have anticipated his choices. The case closes with a sense of unresolved pain and compulsive curiosity, as Holmes continues to navigate his past and his extraordinary abilities.
