In Corleone, Sicily in 1901, nine-year-old Vito Andolini’s father is killed for insulting local Mafia chieftain Don Ciccio, who later kills his elder brother Paolo and mother after she pleads Ciccio to let her remaining son live. Vito escapes to New York and is registered as "Vito Corleone" on Ellis Island.

In 1958, during a party celebrating his son Anthony's First Communion in Nevada, Don Michael Corleone with his caporegimes Al Neri, Rocco Lampone and consigliere Tom Hagen, meet Senator Pat Geary who insultingly demands a high license price as Michael plans to take over another casino, but Michael offers nothing. Johnny Ola, the confidant of Jewish gangster Hyman Roth, tells Michael that Roth would support him. Michael disapproves of his sleazy sister Connie’s lifestyle while attempting to manage his weak brother and underboss Fredo. The Roth-backed Rosato brothers are encroaching on Corleone New York territory and capo Frank Pentangeli, its inheritor after Pete Clemenza's death, is angered when Michael refuses to take action as he wants smooth relations with Roth. At night, Michael survives an assassination attempt at his home and puts Tom in charge, assuring him of their brotherly trust as he felt excluded. He tells him someone close orchestrated it and as expected, the assassins are found dead after their failure.

In 1917, Vito (Robert De Niro) lives in a tenement with wife Carmela and baby son (Santino). The neighborhood is extorted by Don Fanucci. The father of Vito's friend Genco Abbandando is forced to fire Vito from his grocery job, giving it to Fanucci's nephew. One night, Vito's neighbor Peter Clemenza asks him to stash guns, repaying him with an expensive rug they steal from their first crime together.

In Miami, Michael tells Roth that Pentangeli was behind the assassination attempt. Michael then confides in Pentangeli that Roth actually ordered it, but needs Pentangeli to cooperate. Pentangeli meets the Rosatos but their men attempt to garrote him, claiming Michael sent them, but are thwarted by a policeman. Meanwhile Geary’s complicity with the Corleones is guaranteed after he awakens to a dead prostitute at Fredo’s brothel, which Tom reassures they will cover up. Michael meets Roth for a deal in Havana, Cuba where dictator Fulgencio Batista is soliciting American investment, in the midst of a popular rebellion. Having witnessed a rebel suicide bombing, Michael becomes hesitant. Though Fredo arrives with the money, Michael tells him of Roth's intent to have him killed and later confronts Roth over Pentangeli. Roth instead scolds him, reminding of their chosen business. During Batista’s New Year Eve party, Fredo drunkenly reveals he contacted Johnny Ola despite his previous denial. A dismayed Michael embraces Fredo, revealing to him his treachery. Michael signals his bodyguard, who strangles Ola but is killed by police before able to suffocate the ailing Roth. Batista resigns due to the rebellion and the guests, including a frightened Fredo, flee in the ensuing chaos. Back home, Hagen informs Michael that Roth is recovering in Miami and that Kay had a miscarriage.

In New York in 1920, Don Fanucci threatens Vito for a share from his robbery operations. Instead Vito has companions Clemenza and Tessio agree to his plan of paying Fanucci less, because he can make an offer he won’t refuse. Earning Fanucci’s respect, Vito stalks him during a festa from the rooftops and shoots him at his apartment, before later cradling his newborn son, Michael. Thus Vito becomes a respected figure in the community, dealing with requests, including one to have a landlord keep a widow with her dog. Terrified after finding out who Vito is, the landlord grovels to Vito and agrees to the terms at a reduced rent.

In Washington, D.C., a Senate committee is investigating the Corleone family but cannot implicate Michael since witness soldato Willi Cicci claims that he never received direct orders. When Michael appears before the Senate committee, Geary makes an announcement generally supportive of Italian Americans and then excuses himself from the proceedings. Michael makes a statement challenging the committee to produce a witness to corroborate the charges against him. The hearing ends with the Chairman promising a witness who will do exactly that. Pentangeli has made a deal with the FBI to testify against Michael, believing Michael was the one who organized the attempt on his life. He is considered very credible, since as a caporegime there is no insulation between Michael and himself. At the hearing in which Pentangeli is to testify, Michael arrives accompanied by Pentangeli's brother, brought in from Sicily. Upon seeing his brother, Pentangeli recants his earlier written statements, saying that he runs his own family, thereby derailing the government's case. The hearing ends in an uproar with Hagen, acting as Michael's lawyer, irately demanding an apology. Michael and Hagen observe that Roth's strategy to destroy Michael is well planned. Fredo has been found and persuaded to return to Nevada, and in a private meeting he explains his betrayal to Michael; he was upset about being passed over to head the family, and helped Roth, thinking there would be something in it for him. He swears he didn't know they wanted to kill Michael. He also tells Michael that the Senate Committee's chief counsel is on Roth's payroll. Michael then disowns Fredo and privately instructs bodyguard Al Neri that " nothing is to happen to him while my mother's alive." Afterwards, Michael angrily smacks Kay after she tries to leave with their children, revealing her miscarriage was actually an abortion.

In 1925, Vito visits Sicily. With his aid Don Tommasino, he meets the elderly Don Ciccio as an olive oil importer to America. Vito stabs and kills Ciccio, avenging his family, while Tommasino is crippled by gunfire as they escape. Vito and his family then wave, leaving Sicily.

Vito's widow dies, and at the family reunion for her funeral, Michael continues to shun Fredo. When Connie implores him to forgive their brother, Michael relents and embraces Fredo, but as they do so, he exchanges a meaningful glance with Al Neri. Afterwards, Michael, Tom, Al Neri and Rocco Lampone discuss their final dealings with Roth, who has been unsuccessfully seeking asylum from various countries, and was even refused entry to Israel as a returning Jew. Michael rejects Hagen's advice that the Corleone family's position is secure and that killing both Roth, and the Rosato brothers, are unnecessary risks. Later, Hagen visits Pentangeli at the military base. He leads Pentangeli, a student of history, into a discussion on how mafia families were organized like Roman legions, which ends with Hagen's veiled assurance that if Pentangeli were to commit suicide then, just as the Romans did after a failed plot against the Emperor, his family would be spared and taken care of. With Connie's help, Kay visits her children but cannot bear to leave them and stays too long. When Michael arrives, he closes the door in her face. As he arrives in Miami to be taken into custody, Hyman Roth is shot in the stomach and killed by Lampone, who is immediately shot dead by FBI agents. Frank Pentangeli is found dead in his bathtub, having slit his wrists. Finally, Neri shoots Fredo while they are fishing on Lake Tahoe, as Fredo is saying a Hail Mary to help catch a fish. Michael watches from the house.

The final sequence is a flashback to December 1941 as the Corleone family is preparing a surprise birthday party for Vito. Sonny introduces Carlo Rizzi (who would later be complicit in Sonny's death) to Connie. Tessio comes in with the cake, and they all discuss the recent attack on Pearl Harbor by the Japanese. Michael shocks everybody by announcing that he has dropped out of college and enlisted in the Marines. Sonny is furious with Michael's decision, Tom incredulous, and Fredo supportive. Vito arrives (offscreen) and all but Michael leave the room to greet him.

The film ends with Michael sitting alone, outside, in the Corleones' Lake Tahoe compound, deep in thought.

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