In 1955, youngster Henry Hill becomes enamored by the criminal life and Mafia presence in his working class Italian American neighborhood in Brooklyn. He begins working for local caporegime Paulie Cicero and his associates: Jimmy "the Gent" Conway, an Irish American truck hijacker and gangster, and Tommy DeVito, a fellow juvenile delinquent. Henry begins as a fence for Jimmy, gradually working his way up to more serious crimes.

The three associates spend most of their nights in the 1960s at the Copacabana nightclub carousing with women. Henry starts dating Karen Friedman, a Jewish woman who is initially troubled by Henry's criminal activities. Seduced by Henry's glamorous lifestyle, she marries him despite her parents' disapproval.

In 1970, Billy Batts, a made man in the Gambino crime family recently released from prison, insults and demeans Tommy at a nightclub owned by Henry; Tommy and Jimmy beat, stab and fatally shoot Billy. The unsanctioned murder of a made man invites retribution; realizing this, Jimmy, Henry, and Tommy bury the body in upstate New York. Six months later, however, Jimmy learns that the burial site is slated for development, forcing them to exhume and relocate the decomposing corpse.

Later, in 1970, Henry witnesses Tommy murder Spider, an errand boy, after exchanging insults with him during a card game. Karen discovers Henry has a mistress and threatens him at gunpoint. Henry moves in with his mistress, but Paulie insists that he should return to Karen after collecting a debt from a gambler in Tampa with Jimmy. Upon returning, Jimmy and Henry are arrested after being turned in by the gambler's sister, an FBI typist, and they receive ten-year prison sentences. To support his family on the outside, Henry has Karen smuggle in drugs and sells them to a fellow inmate from Pittsburgh.

In 1978, Henry is paroled and expands his cocaine business with Jimmy and Tommy against Paulie's orders. Jimmy organizes a crew to raid the Lufthansa vault at John F. Kennedy International Airport, stealing over six million dollars in cash and jewelry. After some members purchase expensive items against Jimmy's orders and the getaway truck is found by police, he has most of the crew (except Tommy and Henry) murdered.

In 1979, Tommy is deceived into believing he is to become a made man and is murdered after walking into the room of the ceremony—partly as retribution for murdering Batts.

By 1980, Henry develops a drug habit and becomes a paranoid wreck. He sets up another drug deal with his Pittsburgh associates, but he is arrested by narcotics agents and incarcerated. After bailing him out, Karen reveals that she flushed $60,000 worth of cocaine down the toilet to prevent FBI agents from finding it during their raid, leaving them penniless. Paulie reproaches Henry for dealing drugs behind his back and severs their relationship with $3,200. Karen goes to Jimmy for help, but eventually flees upon suspecting a trap to murder her. Henry later meets Jimmy at a diner and is asked to travel on a hit assignment, but the novelty of such a request makes Henry suspicious.

Realizing that Jimmy also plans to have him killed, Henry finally decides to become an informant and enroll, with his family, into the witness protection program. Henry gives sufficient testimony and evidence in court to have Paulie and Jimmy convicted, and moves to a nondescript neighborhood in accordance with the program. Henry describes his unhappiness in leaving his exciting and turbulent gangster life, now being condemned to live the rest of his life as a boring, average "schnook".