At the outset of the story Dr. James Mortimer calls upon Sherlock Holmes to ask for advice in the wake of the death of his friend Sir Charles Baskerville of Devonshire. Sir Charles had resided at Baskerville Hall and was liked for his generosity and amiability. He had suffered for some time with a weak heart and was found dead in the hall grounds one night.
Foul play is not officially suspected but Mortimer claims that Sir Charles was nervous in the months preceding his death. He also spoke of The Hound of the Baskervilles, a centuries old curse intimating that a large hell hound haunts and kills members of the Baskerville line. James Mortimer says that near to the body of Sir Charles were the footprints of a gigantic hound.
Sir Henry Baskerville, heir to the estate and fortune, arrives in London and receives a letter advising him to keep away from the moor. Holmes deduces that whoever wrote the letter was aware of Sir Henry's movements and that the baronet is being followed in London. Sir Henry also tells Holmes that he bought a new pair of brown boots and one of them has been stolen from his hotel. Later Sir Henry has one of his old black boots stolen and the brown one is found.
Holmes suggests that Watson accompanies Sir Henry to Dartmoor and stays by his side in case of danger. Watson is to write reports to Holmes detailing any significant information. Sir Henry, Dr Mortimer and Dr Watson arrive in Devonshire and learn that a vicious murderer named Seldon has escaped from the nearby prison and is presumed to be hiding on the moor. Once at Baskerville Hall Sir Henry's butler, Barrymore, explains that he and his wife cannot be easy in their minds at the hall after the death of Sir Charles and that they will stay only until Sir Henry can find staff to replace them.
During the night Watson hears a woman crying and at breakfast Sir Henry says that he thought he also heard the sobbing. When Mrs Barrymore appears that morning she has red eyes and was clearly the lady who cried in the night time. Mr. Jack Stapleton introduces himself to Dr. Watson. Stapleton tries to elicit an outline of Watson's suspicions as to the death of Sir Charles but Watson insists that he is just visiting Sir Henry. Stapleton says that he knows the moor better that anyone else and claims to be able to traverse the dangerous mire to the heart in order to further his hobbies of botany and entomology. Stapleton tells Watson that he used to be a schoolmaster but that the school was forced to close and he retired to the moor.
Mr. Stapleton's sister, Beryl, speaks with Dr Watson privately and, mistakenly assuming that he is Sir Henry, urges him to return immediately to London. Upon realizing that she is mistaken she asks Watson to persuade Sir Henry to leave. Sir Henry meets Beryl Stapleton and an attraction develops between them. Sir Henry makes the lady a proposal of marriage but to his surprise Jack Stapleton appears, verbally abuses him and behaves as though Sir Henry's attentions to his sister are extremely inappropriate.
Jack Stapleton later apologizes to Sir Henry and gives the explanation that he fears losing his sister's company if she should marry. He asks Sir Henry to content himself with Miss Stapleton's friendship for three months before resuming any thoughts of love and marriage. Sir Henry agrees and the two men make peace with each other.
One night Watson observes Barrymore take a candle to a window and seemingly send a signal out into the darkness. Sir Henry and Watson sit up and catch Barrymore at his stealthy task. Mrs. Barrymore steps in and explains that Seldon, the escaped convict hiding on the Moore, is her brother and that she and her husband have been supplying him with food out of pity.
Watson and Sir Henry set out onto the moor to tackle Seldon whose location is indicated by a light on the moor. Once on the moor the cry of a hound emanates from the centre of the Grimpen Mire. The two men catch sight of Seldon and give chase but he manages to outrun them. Before returning to the hall Watson glimpses the figure of a tall, thin man standing on the nearby tor.
Barrymore requests that Sir Henry and Watson do not reveal to the police that Seldon is on the moor since arrangements have been made to send the escaped man to South America. Sir Henry and Watson agree and in return Barrymore reveals an important piece of information.
On the day of his death Sir Charles received a letter from someone in Coombe Tracey with the initials L.L and the writing indicated that the sender was a woman. After Sir Charles' death Mrs. Barrymore was cleaning out a grate and found the remains of the letter which had been partially burnt. The remaining piece urged Sir Charles to burn the letter and "be at the gate by ten o'clock." Dr. Mortimer tells Watson that L.L might stand for the name Laura Lyons.
Watson makes an expedition to the Neolithic stone huts on the moor in the hope of locating the mysterious man he glimpsed standing on the tor the night he and Sir Henry pursued Seldon. Watson finds an occupied hut and waits for the tenant to return, he is surprised and delighted to find that it is Holmes himself who has been sharing the moor with Seldon. Holmes tells Watson that a close intimacy exists between Jack Stapleton and Laura Lyons and that the woman Mr. Stapleton presents as his sister is in fact his wife. Stapleton was the man dogging Sir Henry in London and it was his wife who sent the warning letter.
Stapleton made a fatal mistake by telling Watson that he was once a school master, this information has allowed Holmes to trace him. As Holmes and Watson talk they hear the dreadful cries of both a creature and of a man in terror. They rush out onto the moor and discover the prostrate body of Sir Henry Baskerville who has seemingly fallen to his death in an effort to escape something which horrified him.
Holmes and Watson are devastated but Holmes examines the body and discovers that it is in fact Seldon the convict who has been killed. Watson recalls that Sir Henry gave Barrymore some of his old clothes and the butler clearly passed these on to Seldon. Holmes explains that a very real hound has been set out with the scent from the boot stolen in London and the clothes Seldon was wearing sealed his fate. The reason a second boot was stolen is that initially the stolen item was new and therefore unworn, useless for trying to give the hound its scent to pursue.
Stapleton approaches and is hard pushed to hide his disappointment that it is not Sir Henry who has been killed. Stapleton says that he had invited Sir Henry over to Merripit House. It is clear that Stapleton wishes to use Sir Henry's attraction to his wife as bait to lure the Baronet onto the moor and then loose the house upon him.
Once at Baskerville Hall that evening Holmes notices a resemblance to Stapleton in the portrait of Sir Hugo Baskerville. Stapleton is part of the family line and wishes to succeed to the estate. Holmes gives Sir Henry the impression that he and Watson are returning to London and tells him to keep the appointment he has to dine at the Stapleton's. Sir Henry is instructed to walk home alone across the moor. In reality Holmes does not intend to leave and has arranged that Inspector Lestrade should join them.
Holmes reveals to Laura Lyons that Stapleton is married. Laura feels betrayed by Stapleton who gave her the impression that he would make her his wife. Laura tells Holmes and Watson that Stapleton urged her to make an appointment with Sir Charles on the night of his death and then to forgo keeping it.
That night Holmes, Watson and Lestrade hide themselves on the path not far from Merripit House. Sir Henry begins his walk across the moor and the hound comes after him. The dog makes an attack on Sir Henry but Holmes manages to shoot it. The dog that Stapleton had chosen to pass for the Hound of the Baskervilles was exceptionally large and covered in phosphorous to give it a glowing, supernatural appearance.
Holmes, Watson and Lestrade search Merripit House and find Mrs. Stapleton tied up in a locked room. She reveals that her husband will have fled into the heart of the mire. With his haste and the foggy night she considers it impossible that he will survive the attempt. The next day when the fog has cleared Beryl Stapleton reveals the pathway to the centre of the mire. There is no sign of Jack Stapleton but Sir Henry's old black boot is found, presumable flung away by Stapleton in his flight before he was dragged to his death by the boggy ground of the mire.
Stapleton was in fact the son of Rodger Baskerville, he was forced to leave America after he purloined public money and once he got to England he got into more trouble while running a school in the north. When he heard of the family fortune Stapleton immediately began plotting to remove those who stood between him and the succession.
With the case complete Holmes and Watson return to London and Sir Henry takes a long voyage around the world in the company of Dr Mortimer to recover from the strain of his experiences.