When Michael retires that evening in his estate's bedroom, he notices his son Anthony's drawing on his pillow. It shows a man [labeled 'Dad'] being chauffeured in a long limousine. Above the vehicle, the drawing asks: "Do you like it" with yes and no check boxes. Their drapes are open - a setup for an assassination attempt, and Kay notices a split-second before: "Michael, why are the drapes open?" Machine gun bullets rip through the window into the room as he dives for cover on the floor with his wife. They are unhurt by the barrage. Sirens sound and lights come on in the compound. His men, with guard dogs, search in the wooded area.

Meanwhile in the boathouse, when just on the verge of consolidating his business interests and becoming legitimate, Michael affectionately places control of the clan in the hands of his consigliere:

...you're the only one I can completely trust. Fredo? Well, he's got a good heart but he's weak, and he's stupid. And this is life and death. Tom, you're my brother...You're gonna take over. You're gonna be the Don. If what I think has happened has happened, I'm gonna leave here tonight. I give you complete power, Tom. Over Fredo and his men, Rocco, Neri, everyone. I'm trusting you with the lives of my wife and my children, the future of this Family.

Michael explains that the perpetrators of the plot - the hit men - are already dead: "Unless I'm very wrong, they're dead already. They were killed by somebody close to us - inside. Very, very frightened they botched it." He suspects that someone on the inside betrayed him - "somebody close to us" in the Corleone family:

See, all our people are businessmen. Their loyalty's based on that. One thing I learned from Pop was to try to think as people around you think. And on that basis, anything's possible.

Two corpses are found in the water by a drainpipe - their throats have been cut [their killer is unknown]. Rocco Lampone explains: "Looks like they were hired out of New York." [Although it may appear that bitter New York mobster Pentangeli is behind the murder plot after being turned down, Michael's deceitful partner Hyman Roth is probably ultimately responsible for the assassination attempt.]

Michael assures his young son at his bedside, who got "lots of presents" at the party from people he doesn't know, that everything's going to be all right. He cannot take his son with him on a train trip to Miami:

Anthony: Did you see my present for you?
Michael: It was on my pillow. Anthony, I'm going to be leaving very early tomorrow.
Anthony: Will you take me?
Michael: No I can't Anthony.
Anthony: Why do you have to go?
Michael: 'Cause I have to do business.
Anthony: I could help you.
Michael: Someday you will.

PROLOGUE:

The film moves from the present to the past for the first time, superimposing in a dissolve the figure of Vito in the right side of the frame. In his New York apartment one evening, twenty-five year old Vito is rocking his baby son Santino (Sonny) to sleep with his wife Carmella, young Mama Corleone (Francesca de Sapio). A superimposed title reads: "VITO CORLEONE, NEW YORK CITY, 1917."

At an Italian vaudeville theater in Little Italy, [authentically, exquisitely, expertly and realistically recreated for the film, resembling Jacob Riis' historical photographs of the era], attended by a largely poor, Italian-American audience, Vito joins his friend Genco Abbandando (Frank Sivero) at the show - about a man named Peppino who left Naples and his Mama and came to New York. A letter brings bad news - his mother is dead. The audience joins and sings "Senza Mamma." The object of Genco's affection is the beautiful actress (Kathy Beller) in the musical melodrama. Genco inadvertently offends Don Fanucci (Gaston Moschin), notoriously known as a member of the local The Black Hand [a Sicilian vigilante group that was involved in organized crime] - a heavy-set Italian wearing an expensive white suit and fedora. Backstage after the performance, Fanucci extorts money from the theater's impresario (Ezio Flagello) and his locked strongbox by threatening his actress/daughter with a knife:

Genco: Fanucci's with the Black Hand. The whole neighborhood pays him. Even my father, in the grocery store.
Vito: If he's Italian...why does he bother other Italians?
Genco: He knows they have nobody to protect them.

Vito has found legitimate and honest employment as a grocer's helper in Abbandando's Grosseria (Grocery Store) in Little Italy. The store is owned by Abbandando, the father of Vito's friend Genco. That evening during dinner, Vito is called to his apartment window by stones hitting the glass and a voice from his well-dressed, next-door neighbor Clemenza (Bruno Kirby, Jr.). From across the apartment shaft between the buildings, Vito is tossed a ragged bundle of handguns to hide: "Hide this for me! Next week I'll come and get it!"

In the grocery store where Vito works hard, his job is displaced by Fanucci who demands that the grocer hire the nephew of the Black Hand member. Supposedly, Fanucci is mad at the entire neighborhood for their late and reluctant payment of protection money: "Says the neighborhood's getting sloppy. People don't pay on time, don't pay the full amount. Says he's been too nice to everyone." Now Fanucci demands "double from everybody."

After losing his job due to Mafia influence, Vito learns some of the tricks that other Italian-Americans use to survive, to become wealthy, or to enter a criminal lifestyle. To return the favor for holding his bundle, Clemenza suggests: "A friend of mine has a nice rug. Maybe your wife would like it." Clemenza jimmies the front-door of an opulent, luxuriously-furnished apartment with a rich, red wool carpet. Vito is impressed by the lavish home: "This is your friend's place?...This is a real palace." While rolling up the carpet on the floor, they are interrupted by a knock on the door - the silhouette of the figure reveals a policeman in uniform. Clemenza holds his gun to the edge of the door as the officer looks in. When he sees nothing, gives up and leaves, they finish stealing the rug and carry the rolled-up "present" to Vito's apartment for installation.

SEQUEL:

Michael travels with a strangely-silent, black-garbed bodyguard Busatta (Amerigo Tot) on a train to Miami, Florida to meet with Hyman Roth. In the bright, mid-day sun, their automobile (with Michael driving) follows Johnny Ola's car through Miami to a middle-class suburban area of the city. They park outside of the modest Roth house. Michael finds Roth, a small-framed, retired-looking businessman in a separate den watching a football game (USC vs. Notre Dame) on television while Mrs. (Marsha) Roth prepares tuna sandwiches. To camouflage their conversation, the television is turned up to full volume, as they solidify their strategy to work together to "make history." The duplicitous Roth expresses regret that there was an attempt on Michael's life:

Roth: I enjoy watching football in the afternoon. One of the things I love about this country. Baseball too. I love baseball ever since Arnold Rothstein fixed the World Series in 1919 (chuckles) I heard you had some trouble. Stupid. People behaving like that with guns. The important thing is you're all right. Good health is the most important thing, more than success, more than money, more than power.
Michael: I came here because there's gonna be more bloodshed. I want you to know about it before it happens so that there's no danger of starting another war.
Roth: Nobody wants another war.
Michael: Frank Pentangeli came to my home, and he asked my permission to get rid of the Rosato brothers. When I refused he tried to have me killed. He was stupid; I was lucky. I'll visit him soon. The important thing is that nothing interfere with our plans for the future, yours and mine.
Roth: Nothing is more important. You're a wise and considerate young man.
Michael: And you're a great man, Mr. Roth. There's much I can learn from you.
Roth: Whatever I can do to help, Michael...You're young, I'm old and sick. What we will do together in the next few months will make history Michael, history. It's never been done before. Not even your father would dream that such a thing could be possible.
Michael: Frank Pentangeli is a dead man. You don't object?
Roth: He's small potatoes.

As promised, Michael pays a visit to Pentangeli's Long Beach Estate, part of the old estate of Don Corleone. Frankie arrives, noticing Michael's bodyguard at his front door. In his father's old study, Michael confronts Pentangeli and decides how to ultimately catch "the traitor" in his family. To demonstrate his loyalty to Roth, Michael asks that Pentangeli arrange a meeting with the Rosato brothers to give up the properties that were once promised to them:

Michael: You heard what happened in my home?
Frankie: Mike, I almost died myself - we was all so relieved
Michael: (shouting) IN MY HOME! IN MY BEDROOM, WHERE MY WIFE SLEEPS! Where my children come and play with their toys! In my home! I want you to help me take my revenge.
Frankie: (terrified) Michael, anything. What can I do?
Michael: Settle these troubles with the Rosato brothers.
Frankie: Mike, I don't understand! I don't...Look, I don't have your brain for big deals, but this is a street thing. That Hyman Roth in Miami, that - he's backing up those son-of-a-bitches.
Michael: I know he is.
Frankie: Then why? Why do you ask me to lay down to them, Mike?
Michael: It was Hyman Roth that tried to have me killed. I know it was him.
Frankie: Jesus Christ, Mike, Jesus Christ, look, let's get them all. Let's hit them all. Now while we got the muscle...
Michael: ...My father taught me many things here - he taught me in this room. He taught me - keep your friends close but your enemies closer. Now if Hyman Roth sees that I interceded in this thing, in the Rosato Brothers' favor, he's going to think his relationship with me is still good...That's what I want him to think. I want him completely relaxed and confident in our friendship. Then I'll be able to find out who the traitor in my family was.

Fredo [who probably betrayed his brother Michael and nearly had him killed in his own bedroom] receives a late-night phone call while asleep next to his wife. He is asked for an additional favor from Johnny Ola, Hyman's "Sicilian messenger boy" - reassurance that Pentangeli will come alone to the Rosatos' meeting so that he can be Roth's next target:

We need some more help...Pentangeli's set up a meeting with the Rosato brothers. He says he's gonna go for their deal...Will he come alone?...Pentangeli says he's willing to make a deal. All we want to know is if he's on the level, or if he's gonna bring his boys.

In New York City, Pentangeli walks toward Rosato's Bar, accompanied by bodyguard Cicci for their meeting. Outside the bar, he is met by Carmine Rosato (Carmine Caridi). Feeling safe, Pentangeli sends Cicci to wait in the car. Pentangeli is given a "lucky C-note for our new deals" - but Frankie is insulted by it: "I take that as an insult." During their conversation at the bar, killer Tony Rosato (Danny Aiello) sneaks up behind Frankie and throws a garotte around his neck to strangle him: "Michael Corleone says hello!" While struggling with his assassins, Pentangeli is forcefully dragged over to a wooden telephone booth, but a uniformed cop interferes and scares off the buttonmen, leaving Pentangeli barely alive on the floor. Outdoors, a gun battle erupts and a policeman is shot by one of the Rosatos. Cicci is wounded and hit by the Rosato car as it speeds away.

Fredo and Tom Hagen arrive, in the next scene, inside one of Fredo's bordello lounges (probably in Carson City). Senator Geary, one of the frequent visitors there, is in one of the back rooms. Wearing only a towel and a dazed, confused look, the Senator is found in the brothel with a bloodied, dead prostitute, but claims he can't remember anything: "I didn't do anything...when I woke up, I was on the floor and I don't know how it happened...I passed out." Geary, who had often willingly played bondage games with the whore before, unties her wrists and dabs blood from her thighs with a towel: "Just a game...we'd done it before and I know that I could not have hurt that girl" - but he is now broken, shocked and ashamed, and fears the implications of his guilt. To put Geary in their ever-lasting gratitude [after setting him up by having the prostitute killed by Neri], Hagen promises to help:

Now if this had happened someplace else, we couldn't have helped...Just do as I say. We're putting a call into your office. Explain that you'll be there tomorrow afternoon. You decided to spend the night at Michael Corleone's house in Tahoe as his guest...This girl has no family, nobody knows that she worked here. It'll be as though she never existed. All that's left is our friendship.

Kay is held back, for her own safety, at the Tahoe's estate gate from leaving to go to the market, under Tom Hagen's orders during Michael's absence. She is upset by the restrictions on her life: "Am I a prisoner? Is that it?"

The scene shifts again to Havana, Cuba [filmed on location in the Dominican Republic], where Michael is traveling with his bodyguard in a Mercury Sedan through the streets to the Presidential Palace, for a meeting of American industrialists with the Cuban President/dictator Fulgencio Batista (Tito Alba). Pimping, black-market activities, poverty, street performers, and tourism are seen in glimpses on the street, although the corrupt President calls this a prosperous time for Cuba: "the greatest period of prosperity in her entire history." Others in attendance at the long table include executive representatives of the General Fruit Company (William Shaw), United Telephone and Telegraph Company (Fred Corngold and Mr. Dant), Pan-American Mining Corporation (Mr. Petty), and South American Sugar (Robert Allen). Michael is there from Nevada "representing our Associates in Tourism and Leisure Activities," along with the President's "old friend and associate from Florida" Hyman Roth. The UTTC representative presents the Cuban dictator with a solid gold telephone as a Christmas gift - it is passed among the seated men at the table for a "look." Although there is "rebel activity" ("an impressive campaign in Las Villas") which threatens Cuba's gambling kingdom and business ventures, they are put "at ease" about the crisis:

We'll drive them out of the city of, uh, Santa Clara before the New Year...We will tolerate no guerrillas in the casinos or the swimming pools.

As Michael's car drives through the crowded streets, they are stopped in traffic as police search and arrest rebels. Johnny Ola notes: "Just some lousy bandits. The police are cleaning them up." One Spanish guerrilla rebel runs across the street, shouts: "Viva Fidel!", pushes an official into a parked car, and suicidally blows them up with a fiery, smoky grenade explosion. Michael perceptively notices that Cuba is shaky politically - and that the impending guerrilla rebellion would most likely upset Roth's plans in Cuba.

A birthday cake with a lit sparkler on top and a decorative picture of Cuba is wheeled along on a serving cart on the open-air terrace of the Roth-owned Capri Hotel - a thematic transition from the previous scene. Hyman Roth is celebrating his sixty-seventh birthday and asks: "I hope my age is correct. I'm always accurate about my age." His cake is decorated with a map of Cuba. Speaking like a generous mentor to his business associates, he marvels at the prospects of great wealth in Cuba through new political alliances and Batista's cooperation with the mob. All will share in pieces of the despoiled island: like the pieces of cake cut from Cuba and handed out, the Capri will go to the Corleone family, and other parts of the Havana operation will be divided among other gangster partners:

When a man comes to this point in his life, he wants to turn over the things he's been blessed with - turn them over to friends as a reward for the friends he's had and to make sure that everything goes well after he's gone...These are wonderful things that we've achieved in Havana, and there's no limit to where we can go from here. This kind of government knows how to help business to encourage it. The hotels here are bigger and swankier than any of the rough joints we put in Vegas. And we can thank our friends in the Cuban government which has put up half of the cash, with the Teamsters, on a dollar-for-dollar basis, has relaxed restrictions on imports. What I'm saying is that we have now what we have always needed - real partnership with the government...You all know Michael Corleone. And we all remember his father. At the time of my retirement or death, I turn over all my interest in the Havana operation to his control, but all of you will share.

Michael astutely senses profound changes within the political arena, sparked by his witnessing the death of a Fidel Castro rebel, and he doubts the rosy prospects of wealth and fortune:

Michael: A rebel was being arrested by the military police, and rather than be taken alive, he exploded a grenade he had hidden in his jacket. He killed himself and he took a captain of the command with him...it occurred to me the soldiers are paid to fight, the rebels aren't
Roth: What does that tell you?
Michael: They can win.

Corleone's $2 million investment in the business partnership has been held up and "never got to the island." Inside Roth's Havana suite in the Capri, Roth is concerned that Michael is deliberately stalling with fears about Castro's revolution and the rebel situation:

I wouldn't want it to get around that you held back the money because you had second thoughts about the rebels...If I could only live to see it, to be there with you. What I wouldn't give for twenty more years. Here we are, protected, free to make our profits without Kefauver, the goddamn Justice Department and the F.B.I. ninety miles away, in partnership with a friendly government. Ninety miles. It's nothing. Just one small step, looking for a man that wants to be President of the United States, and having the cash to make it possible. Michael, we're bigger than U.S. Steel.

The pimpish Fredo arrives at Michael's Capri suite from the Havana airport, wearing a beige jacket, black pants, and carrying the millions in Corleone money for "an investment in Havana - this is a little gift for the President." Fredo denies knowing anything about Havana, or his brother's associates Hyman Roth or Johnny Ola. [As he finishes his sentence: "No - I never met them," police sirens wail in the distance.]

At an outside Garden Cafe, Fredo regrets his failed marriage and not marrying a woman like Kay: "Sometimes I think I should have married a woman like you did. Like Kay. Have kids. Have a family. For once in my life be more like Pop." Fredo feels like the outsider in the Corleone family: "You know Mama used to tease me. She'd say, 'You don't belong to me. You were left on the doorstep by gypsies.' Sometimes I think it's true." He almost confesses his betrayal to Michael, describing his anger: "Mikey, I - I was mad at you...Why didn't we spend time like this before?"

Fredo's main "specialty" is escorting dignitaries and Michael's associates around for entertainment - he is called upon to entertain Senator Geary and other government officials from Washington and "show 'em a good time in Havana" on the 1958 eve of the New Year. To bait his brother Fredo (even though he suspects his brother), Michael describes his hunch about Hyman Roth being his assassin that evening - and his plan to seek revenge:

Michael: Can I trust you with something, Fredo?...Later on in the evening we're all invited to the Presidential Palace to a reception to bring in the New Year. After it's over, they're gonna take me home in a military car alone for my protection. Before I reach my hotel, I'll be assassinated.
Fredo: Who?
Michael: Roth. It was Roth who tried to kill me in my home. It was Roth all along. He acts like I'm his son, his successor, but he thinks he's gonna live forever. He wants me out.
Fredo: How can I help?
Michael: You just go along as though you know nothing. I've already made my move.
Fredo: What move?
Michael: Hyman Roth'll never see the New Year.