Oliver Holmes is ten years old, a child genius, and an orphan, living with his aunt and uncle in Minneapolis. His aunt takes him to a psychologist, Watt, and Oliver immediately tells him that he is Watson, as surely as Oliver himself is actually Sherlock Holmes. The boy speaks calmly and rationally, sure of his ideas—and he is right about many of his other observations, which he explains just like Sherlock Holmes would in Conan Doyle's classic books. Watt has Oliver start coming in for sessions twice a week.

Oliver almost immediately shares his most disturbing detail, which is that he believes that Moriarty, the villain from Sherlock Holmes, is in their lives and is out to kill Oliver. To convince Watt, he asks him to meet him for a stakeout after their session. Watt reluctantly agrees, and picks him up at 6 pm that day. Oliver instructs him to tail his aunt, and the two watch as Oliver's aunt meets up with a man dressed as a circus clown and kisses him. Watt decides that Oliver feels threatened by the affair, fearing the breakup of the little family he has after the death of his parents, and tells his aunt this.

However, when he speaks to the boy again, Oliver has deeper concerns than the breakup of his relatives' marriage—he believes that Moriarty plans to kill him. He reveals his information that Moriarty the clown is actually a fugitive from the law, a man who committed petty crimes in multiple other states and has managed to stay just ahead of the law, using different names that all follow the initials M.P. Oliver states that he thinks Moriarty seeks to get rid of him to get ahold of his inheritance from his dead parents, and that he has a particular vendetta against Oliver himself. Disturbingly, Oliver tells Watt that he has already set the wheels in motion for a face-off between the two, at "Reichenbach Falls," where Holmes and Moriarty struggle and fall to their deaths in the novel.

Watt tries to go to Oliver's home to stop him, but finds out Oliver has run away. He goes to Minnehaha Falls nearby, the closest thing he can think of to Reichenback Falls, and finds a neighborhood circus underway there. He finally spots Oliver standing by himself, but before he can get to him, the clown, Moriarty, approaches the boy and tries to push him off the edge. Oliver grabs the clown instead and the two both disappear from sight. Stricken, Watt runs to the spot where they disappeared, but only sees the clown's body on the rocks below. Then Oliver calls out to him, and Watt sees the boy held upside down by a rope around his ankle.

As the police arrive to take care of the body, Oliver explains his plan to Watt. He'd contacted the clown using the number from his aunt's phone and anticipated his move. Watt is shaken, but finally accedes to the boy's requests to call him Sherlock and tells him to continue with their sessions, thinking the boy needs a friend.