The Godfather Part II presents two parallel storylines. One involves Mafia chief Michael Corleone following the events of the first film from 1958 to 1959; the other is a series of flashbacks following his father, Vito Corleone, from his childhood in Sicily (1901) to his founding of the criminal Corleone Family in New York City while still a young man (1917–1925).


In 1901, in the town of Corleone in Sicily, at the funeral procession for young Vito's father, Antonio Andolini, who had been ordered killed by the local Mafia chieftain, Don Ciccio. During the procession, Vito's older brother Paolo is also murdered because he swore revenge on the Don. Vito's mother goes to Ciccio to beg him to let young Vito live. When he refuses, she holds a knife to his throat, sacrificing herself to allow Vito to escape, and Ciccio's gunmen shoot her. They scour the town for Vito, warning the sleeping townsfolk that they will regret harboring the boy. With the aid of a few of the townspeople, Vito finds his way by ship to New York. Arriving at Ellis Island, an immigration agent, mishearing Vito's hometown of Corleone as his surname, registers him as "Vito Corleone". He is then ordered to stay on the island for several months due to smallpox.


In 1958, Michael Corleone, Godfather of the Corleone Family, deals with various business and family problems at his Lake Tahoe, Nevada compound during an elaborate party celebrating his son's First Communion. He meets with Nevada Senator Pat Geary (G.D Spradlin), who despises the Corleones, but has shown up with his wife to accept a large endowment to the state university. Senator Geary demands a grossly exaggerated price for a new gaming license and a monthly payment of 5% of the gross profits from all of the Corleone Family's Nevada gaming interests, all while insulting the Corleones and Italians in general. Michael defends his family while keeping his usual calm demeanor, and tells Senator Geary that his offer is for Geary to give him the gaming license for free.


Michael also deals with his sister Connie, who, although recently divorced, is planning to marry a man with no obvious means of support, and of whom Michael disapproves. He also talks with Johnny Ola, the right hand man of Jewish gangster Hyman Roth, who is supporting Michael's move into the gambling industry. Finally, Michael meets with Frank Pentangeli, who took over Corleone caporegime Pete Clemenza's territory after his death, and now has problems with the Rosato Brothers, who are backed by Roth. Michael refuses to allow Pentangeli to kill the Rosatos, due to his desire to prevent interruption of his business with Roth. Pentangeli leaves abruptly, after telling Michael "your father did business with Hyman Roth, your father respected Hyman Roth, but your father never trusted Hyman Roth or his Sicilian messenger boy Johnny Ola."