The plot of Sherlock Holmes: The Case of the Silver Earring takes place in London in 1897. Sherlock Holmes attends a party hosted by construction magnate Sir Melvin Bromsby. During this solemn event, shots are fired that kill the host. The game begins at this point.

The player's goal is to solve a murder mystery and find the perpetrator. Playing the role of detective Sherlock Holmes and his friend Dr. Watson, the player is tasked with interrogating the witnesses of the incident, examining items that may lead him to clarify the mystery, as well as reaching the mysterious alleys of London to meet with people potentially involved in the murder. To collect evidence of murder, the player will visit as many as 40 different locations.

The hero is controlled with the mouse. Clicking in the direction a player wants to go usually causes the character to move in that direction. Double-clicking causes Holmes or Watson to run. Right-clicking will bring up the inventory bar. The player also has a notebook with transcripts of witnesses' conversations and an analysis of material evidence collected during the game.