Katelyn Holmes (born Katelyn Moriarty) is the biological daughter of Professor James Moriarty, who upon his death, requested that Sherlock Holmes be the one to look after her.
Moriarty took Katelyn with him to the funhouse at the Carnival he was working out of in order to keep her safe from the impending poisoning of London, which would lead to mass riots and death.
Sherlock Holmes tracked Moriarty to the carnival and put a stop to his plans. Moriarty made a final attempt to stop Sherlock Holmes, but was killed by Hans Schliemann who was affected by the poison. He requested Holmes look after his daughter with his final breath. Sherlock obliged his request and raised Katelyn as his own.
Katelyn arrives unexpectedly at Baker Street, after her boarding school was flooded. Watson offers Katelyn his room during her stay.
She becomes quite stricken on Sherlock's new neighbour, Alice De'Bouvier, who dotes on her. Holmes becomes suspicious of Alice, and confronts her at a point, though she retorts that he paranoid, though she passively threatens Holmes, and reveals that she knows Katelyn is not his daughter.
Katelyn gets upset and storms off after Holmes had forgotten her birthday, and goes to the zoo with Alice, whereupon Holmes decides to take advantage of the opportunity and search her flat, where he discovers she has been spying on him. He also learns that she is the daughter of a man he'd had arrested twenty years prior. Holmes demands she not go near Katelyn again.
Alice takes Katelyn to the cemetery with the intent manipulating Katelyn into suicide, by revealing that she is the daughter of Professor Moriarty, and that Holmes had killed him, in order to show Holmes how she felt after losing a loved one. Holmes manages to save Katelyn, apologising for not being honest with her, and that he knows she is a good person, and not at all like her real father. Katelyn and Holmes escape leaving Alice to burn to death.