The film starts with some little gnomes starting to tell the story of Sherlock Gnomes (Johnny Depp), "sworn protector of all garden gnomes in London", and his partner, Watson (Chiwetel Ejiofor). Their latest mystery brings them to the Natural History Museum where they must rescue a group of captured gnomes from Sherlock's arch-nemesis, Moriarty (Jamie Demetriou), here seen as a weird pie-baby mascot. Using his wits, Sherlock outsmarts Moriarty and saves the gnomes after sending a giant dinosaur skeleton to presumably smash Moriarty. Sherlock is a hero to the gnomes but a jerk to Watson.
The Montague and Capulet garden gnomes are moving into a new home in London. Gnomeo (James McAvoy) and Juliet (Emily Blunt) settle in with their friends and family. Benny (Matt Lucas) has fallen in love with Nanette the frog (Ashley Jensen) but is too nervous to express his feelings. Lord Redbrick (Michael Caine) and Lady Bluebury (Maggie Smith) decide to retire and name Gnomeo and Juliet as the new leaders of the group.
Sherlock and Watson learn that whole groups of garden gnomes are disappearing all over London. They immediately hop on the case and set out to find clues. Based on the pattern they have uncovered, Sherlock believes this to be the work of Moriarty. His hunch is proven correct when they find Moriarty's calling card with the letter M on it.
Gnomeo wants to make a grand romantic gesture for Juliet by finding her favorite flower, a Cupid's Arrow Orchid, as the centerpiece in their new garden. With Benny's help, Gnomeo finds a nearby flower shop that sells it. Unfortunately, he ends up triggering the alarm after Juliet sees him through Benny's camera. She rushes to find Gnomeo and manages to rescue him, but she is angry with him for leaving the garden.
When they return home, Gnomeo and Juliet discover that all the other gnomes (and Nanette) are gone. The two soon meet Sherlock and Watson as they are on the hunt for the other missing gnomes. Gnomeo and Juliet follow them into the sewers where they evade rats and a flood. Watson explains to them about Moriarty and how he's playing a game with Sherlock.
Sherlock's clue leads the group to a Chinese antique shop. As they look for the next clue, the group angers a bunch of ceramic cats when Gnomeo accidentally knocks over their empress, and they are chased out, but Sherlock manages to find the next clue inside a cuckoo clock stuck to a toy plane before they have to escape.
The clue brings them back to the Natural History Museum, but Sherlock believes they are meant to go to a gallery. He splits up with Juliet while Gnomeo stays with Watson. The two are stalked by a gargoyle in the museum. He chases after them, capturing Gnomeo and causing Watson to fall to his apparent demise, which Sherlock and Juliet see. Still, they proceed to the gallery to find the clue, but they both realize how much they took their respective loved ones for granted.
The gargoyle brings Gnomeo to a hideout where all the other gnomes are being kept and are all partying. He reunites with his mother and friends. The gnomes think that the gargoyle and his buddy are keeping them there for safety in time for some kind of fireworks show, but Gnomeo tells Lady Bluebury that they are most likely going to be smashed the following night, leading the gnomes to panic.
Sherlock figures the next clue will lead them to a park. He and Juliet disguise themselves as a squirrel and are chased by the Hound of the Baskervilles after they try to retrieve the clue from his squeaky toy. They manage to outrun the dog and find a button on the next clue, which terrifies Sherlock. They go to a doll museum where Sherlock reunites with his former flame, Irene (Mary J. Blige). She is not happy to see him because he broke off their engagement and believes that he is now with Juliet. After doing a song, Irene has Sherlock and Juliet kicked out without giving them the next clue. However, Juliet goes back inside and talks to Irene and convinces her to let her have it.
Gnomeo plans an escape with the gnomes by using Benny and Nanette to create a distraction for the gargoyles by putting on a performance of "The Frog Princess". It doesn't work, and the gargoyles end up stuffing the gnomes in a bag for their boss.
Sherlock and Juliet follow the last clue to the Tower of London where he and Watson solved their first case. There, they discover that Watson himself was behind the gnome-nappings. He explains that it was all part of a game of wits to beat Sherlock since he hasn't respected him as a partner for years. The gargoyles show up, and Watson tries to take them to free the gnomes, but the gargoyles reveal they were never working for Watson and they throw him, Sherlock, and Juliet onto a ship.
The three find themselves heading toward Tower Bridge, where Sherlock realizes what is happening. They are then shown a video by Moriarty, still (unsurprisingly) alive. His plan is to trap all the gnomes under the bridge so that they may get crushed to piece when the bridge raises up as the ship passes under, making Sherlock the unwitting executioner of the gnomes. Unbeknownst to Moriarty, Gnomeo has escaped and has discovered his plan.
Juliet convinces Sherlock and Watson to reconcile so that they may save the gnomes. They hijack a drone and head to find them. Meanwhile, Gnomeo and three little gnomes try to find a way to stop the bridge from opening. After they succeed, Juliet gets Gnomeo on the drone while Watson goes to free the gnomes and Sherlock faces Moriarty. Watson finds an opening for the gnomes to escape while the gargoyles fall into the river and sink after trying to get the heroes. Sherlock and Moriarty battle atop the bridge, and when the villain attempts to go after Sherlock's friends, the detective tackles Moriarty, sending them over the bridge. Watson rescues Sherlock with his grappling cane while Moriarty is carried away in the river.
The gnomes are all returned home. Gnomeo and Juliet return to their garden with their friends and family, placing a new flower in the center of the garden. Benny and Nanette get together. Sherlock and Watson walk away together as friends.
*CUT TO THE CHASE*
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The sinister Moriarty has captured all of London's garden gnomes. Gnomeo and Juliet team up with Sherlock Gnomes and Dr. Watson to find and rescue them.
Moriarty's plan is to crush all the garden gnomes under the Tower Bridge and frame Sherlock for it. The heroes band together to rescue the gnomes and foil Moriarty's plan. Sherlock defeats him as he does in every Sherlock incarnation, by sending both of them over the falls, but Sherlock is saved by Watson.
The gnomes return home and live happily ever after.
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