The highly astute Sherlock Holmes has an uncanny ability to reason, acute knowledge of forensics, and a talent for disguise that greatly contributes to the maintenance of law and order. Holmes's primary tool is abductive reasoning, a form of reasoning that, using inference, moves from observation to hypothesis that accounts for observation.

• For example, in "The Red-Headed League," by the shop of Jabez Wilson, Holmes "thump[s] vigorously upon the pavement with his stick two or three times" then he goes up to the door and knocks. When a young man comes to the door, Holmes asks directions. These two actions have been performed to make observations which lead to the hypothesis that there is digging going on underground.
• Prior to this observation, Holmes has also learned that Spaulding, the young man who works for Wilson has "an interest in photography" and spends much time in the cellar. So, added to his observations of Spaulding's knees on his pants, Holmes puts this added information together with his brilliant reasoning powers and the knowledge that the nearby bank which he discovers when he walks around the corner is storing French gold in the cellar beneath the bank which is adjacent to Wilson's shop.
• When the Red-Headed League offices are closed, Holmes surmises that the tunnel digging is finished and the crime ready to be committed because they would not want to hold that office for long.
• Therefore, Holmes contacts the chairman of directors of the bank, Mr. Merriweather, and Mr. Jones of Scotland Yard. They wait and defeat one of the "most complete manner one of the most determined attempts at bank robbery that have ever come within my experience."

Sherlock Holmes also employs deductive reasoning; as Watson describes his mind, Holmes possesses "a cold, precise but admirably balanced mind."

• In another story, "A Scandal in Bohemia," Watson comes to visit his friend shortly after he is married. When Holmes remarks that Watson has not told him that he has married, Watson asks him how he knew this; Holmes says to him,

"I see it, I deduce it. How do I know that you have been getting yourself very wet lately, and that you have a most clumsy and careless servant girl."

When asked by Watson how he has deduced that the servant girl is careless and he has been wet, Holmes replies that when the firelight hit the shoes, he noticed six "almost parallel cuts" where the girl has attempted to scrape off mud from the soles of Watson's shoes.

• He also observes that of three people, one French, one Russian, and another German, only the German could have written something:

'This account of you we have from all quarters received.' A Frenchman or Russian could not have written that. It is the German who is so uncourteous to his verbs. 

Also in this story, Holmes makes skillful use of disguise in order to glean evidence without being recognized. In "A Scandal in Bohemia," for instance, he disguises himself in order to learn more about Irene Adler, and humorously, he is drawn into acting as a witness to her wedding to Godffrey Norton.

• In another incident of "A Scandal in Bohemia," in order to deduce who is guilty, Holmes feigns illness in order to flush out the guilty parties. So accomplished an actor is Holmes that Watson declares,

 "The stage lost a fine actor ... when [Holmes] became a specialist in crime."