Here are summaries (warning—there are major spoilers) of episodes in season two.
Season Two (2012)
Episode 1: A Scandal In Belgravia
Picking up where Season One left off, Moriarty lets Sherlock and Watson go, and things return somewhat to normal.
One day, Mycroft summons the pair to Buckingham Palace and explains that a member of the royal family has had compromising photographs taken with a dominatrix named Irene Adler and wants them back.
Sherlock and Watson visit Adler’s home. After some initial banter, Sherlock finds Adler’s safe. Before he can open it, gunmen burst in and demand that Sherlock open the safe. He figures out the password (Adler’s body measurements, 32-24-34) and opens the safe, which is booby-trapped, and one of the gunmen is killed. Adler drugs Sherlock and flees.
Months later, Irene reappears and asks Sherlock to decipher a code she obtained from a government official. He does, not realizing that she will pass the information to Moriarty. Moriarty uses it to uncover a government counterterrorism operation, leaving Mycroft furious with Sherlock.
Irene attempts to use the information on her phone as leverage, but Sherlock realizes that its password is “SHER”—the first four letters of his name—and unlocks it, destroying her bargaining position.
Mycroft tells Watson that Irene has been killed in Karachi and asks him to tell Sherlock that she entered a witness protection program instead. But the final scene reveals another twist: Sherlock was there and rescued Irene before she could be executed.
Episode 2: The Hounds of Baskerville
Sherlock is visited by Henry Knight, a man haunted by the memory of his father being killed by a gigantic hound on Dartmoor when Henry was a child. Although initially skeptical, Sherlock agrees to investigate.
Sherlock and Watson travel to Dartmoor, where they learn about Baskerville, a nearby secret military research facility. They manage to gain access to the base and begin looking for a possible connection between it and Henry’s story.
Later, Sherlock accompanies Henry to the hollow where his father died and sees the hound himself.
The experience deeply unsettles Sherlock, who is forced to confront the possibility that his own senses have deceived him.
Watson later has a terrifying experience of his own in a laboratory at Baskerville, where he believes the hound is stalking him.
Sherlock eventually reveals that he deliberately exposed Watson to the frightening situation as an experiment.
The breakthrough comes when Sherlock realizes that“hound” may not refer to an animal at all. H.O.U.N.D. was the name of a secret military research project involving a chemical weapon designed to induce extreme fear and hallucinations. Although the project was abandoned years earlier, Dr. Bob Frankland has secretly continued the research.
Sherlock determines that Frankland murdered Henry’s father. As a child, Henry saw the killer wearing clothing bearing the H.O.U.N.D. logo, and his traumatized memory eventually transformed what he had seen into a monstrous dog. Exposure to the experimental drug causes Henry (and later Sherlock and Watson) to hallucinate the hound.
Sherlock and Watson find Henry before he can kill himself and expose Frankland as the murderer. Frankland flees and is killed when he runs into a minefield surrounding Baskerville.
Meanwhile, back in London, Mycroft has been holding Moriarty in custody—and releases him.
Episode 3: The Reichenbach Fall
The episode opens with Watson telling his therapist, “My best friend, Sherlock Holmes, is dead.” The story then flashes back several months.
Moriarty stages a spectacular series of crimes, targeting the Tower of London, the Bank of England, and Pentonville Prison. He allows himself to be arrested and put on trial, where Sherlock testifies against him. Moriarty offers no defense but is nevertheless acquitted after threatening the families of the jurors.
After his release, Moriarty visits Sherlock and makes clear that his real target is not money or power—it is Sherlock himself.
Sherlock and Watson later investigate the kidnapping of two children. Although Sherlock solves the case, his uncanny ability to find the children makes the police suspicious. Moriarty has been planting evidence and manipulating events to convince people that Sherlock is a fraud who has staged his celebrated cases himself.
Lestrade is eventually ordered to arrest Sherlock. Sherlock escapes with Watson, and the two try to unravel Moriarty’s plan.
Their confrontation ends on the roof of St. Bartholomew’s Hospital. Moriarty reveals that assassins are watching Watson, Mrs. Hudson, and Lestrade and will kill them unless Sherlock dies. Sherlock believes Moriarty has a way to call off the assassins and threatens to force him to reveal it.
Moriarty realizes there is one way to make that impossible: he shoots himself.
With Moriarty dead and apparently no way to stop the assassins, Sherlock calls Watson and tells him that Moriarty was right—that Sherlock has been a fraud all along. Watson watches as Sherlock appears to jump from the hospital roof to his death.
Later, Watson and Mrs. Hudson visit Sherlock’s grave. Watson struggles to accept the loss of his friend and asks Sherlock for one last miracle: “Don’t be dead.”
After Watson walks away, the final shot reveals Sherlock standing nearby, watching him.