The old legend of Sir Hugo Baskerville is narrated to Holmes and Watson by Dr Mortimer. Apparently Sir Hugo was a wild and fearsome man who took a fancy to a young woman living near his estate and carried her off by force when she refused to marry him. He kept her imprisoned but one night, when he was carousing with friends, she escaped and tried to make her way home across the moor. In a fury, he set his dogs after her. Later, his friends found the body of the maiden on the moor, 'dead of fear and fatigue' - and also Sir Hugo, with the terrifying apparition of a giant hound nearby:
Standing over Hugo, and plucking at his throat, there stood a foul thing, a great, black beast, shaped like a hound, yet larger than any hound that ever mortal set eyes upon. (chapter 2)
This hellish creature, clearly some kind of spectre and not a real dog, was also enough to frighten Sir Hugo's friends out of their senses.
Sir Hugo and the maiden, then, both perished in frightening circumstances. The tale is essentially a moralistic one; Sir Hugo's immoral pursuit of the unfortunate girl had the effect of calling down the curse of the hound upon the Baskerville family. This curse now seems to hang heavy over Hugo's twentieth-century descendant, the more amiable Sir Henry, and Dr Mortimer is afraid for his safety. That is why he comes to consult Holmes.
Holmes dismisses the story as a 'fairytale', but, as it turns out, there is a villain in modern times who is attempting to exploit the old legend in order to get at Sir Henry, and Holmes and Watson must do their best to outwit him.