The second instalment of the movie series starring Robert Downey Jr and Jude Law took more than $3 million - half its box office takings from its debut last week.
> Stephen Fry: 'Sherlock Holmes: A Game of Shadows' interview
In second spot is new entry The Girl with the Dragon Tattoo, a murder mystery featuring Daniel Craig and Rooney Mara, followed by The Muppets, which took $2,302,848 in ticket sales.
Another new entry takes fourth place with The Descendants, followed by Alvin and the Chipmunks: Chipwrecked, which came second in last week's chart.
Other movies in the top ten include Meryl Streep's Margaret Thatcher biopic The Iron Lady, stage play-turned-motion picture War Horse and The Adventures of Tintin, which won 'Best Animated Film' at yesterday's Golden Globes.
The Australian box office top ten in full below (figures in Australian dollars):
1. (1) Sherlock Holmes: A Game of Shadows - $3,269,117
2. (-) The Girl with the Dragon Tattoo - $2,335,490
3. (-) The Muppets - $2,302,848
4. (-) The Descendants - $2,292,072
5. (2) Alvin and the Chipmunks: Chipwrecked - $2,157,308
6. (-) Hugo - $1,699,332
7. (3) The Adventures of Tintin - $953,933
8. (5) War Horse - $836,512
9. (4) Tower Heist - $744,357
10. (8) The Iron Lady - $736,050
Watch the trailer for Sherlock Holmes: A Game of Shadows below: