Sherlock Holmes is hired by the débutante Lady Eva Blackwell to retrieve compromising letters from a blackmailer: Milverton, who causes Holmes more revulsion than any of the 50-odd murderers in his career. Milverton is "the king of blackmailers". Happy to make an example of Lady Eva; it is in his long-term interest to ensure that his future blackmail victims would be more "open to reason" and pay him what he wants, knowing he will destroy them if they do not. Holmes resolves to recover the letters by whatever means necessary, as Milverton has placed himself outside the bounds of morality.

The character of Charles Augustus Milverton was based on a real blackmailer, Charles Augustus Howell. He was an art dealer who preyed upon an unknown number of people, including the artist Dante Gabriel Rossetti.