Terror By Night takes most of the intriguing elements of the previous Holmes film (Pursuit to Algiers), leaves out the extraneous bits which hampered that particular film, cranks up the suspense, and roars out of the station on the rails of a complex and entertaining mystery.
The film follows Holmes and his friend/chronicler Watson on a train voyage, where Holmes has been commissioned to guard a precious stone. When the gem is inevitably stolen, with murder to accompany the theft, Holmes and Watson are thrust into yet another profound whodunit. With a gallery of suspects to choose from, Holmes must find the thief/murderer before the train reaches its final destination...at great risk to his own personal safety, naturally.
This film is far more effective than its predecessor on virtually every level. The suspense is palpable and sustained, the pacing quick and uninterrupted (thankfully, no musical numbers to detract from the overall ambiance). The cinematography is dark and moody, evoking film noir and the classic films of Alfred Hitchcock. The lead performances are, as always, great...Rathbone and Bruce play it up wonderfully here, though Bruce's Watson does seem to go out of his way to make a fool of himself. Dennis Hoey also puts in the last of his six performances as Inspector Lestrade here, and contributes his usual warm, if perpetually inept (the character, not the actor), presence.
Overall, I'd rate Terror By Night as one of the top five films in the Universal Holmes series. A vast improvement over Pursuit to Algiers, with a similar plot, but far better execution. If you haven't time to watch both, give Pursuit a miss and stick with Terror.