In the opening scene, Irish-Italian main character Henry Hill (Ray Liotta) admits, "As far back as I can remember, I always wanted to be a gangster," referring to his idolizing the Lucchese crime family gangsters in his blue-collar, predominantly Italian neighborhood in East New York, Brooklyn in 1955. Feeling the connection of being a part of something, Henry quits school and goes to work for them. His Irish father, knowing the true nature of the Mafia, tries to stop Henry after learning of his truancy, but the gangsters ensure that his parents no longer hear from the school by threatening the local postal carrier with dire consequences should he deliver any more letters from the school to Henry's house. Henry is able to make a smooth living for himself, also learning the 'two most important lessons in life: never rat on your friends and always keep your mouth shut' said to him after young Henry remains silent after a hearing. This establishes the tone for the rest of the film.
Henry is soon taken under the wing of the local mob captain, Paul "Paulie" Cicero (Paul Sorvino, based on the actual Lucchese mobster Paul Vario) and Cicero's close Irish associate Jimmy "The Gent" Conway (Robert De Niro, based on Jimmy Burke). They help to cultivate Henry's criminal career, and introduce Henry to the entire network of Paulie’s crime syndicate. Henry and his friends soon become successful, daring, and dangerous. Jimmy loves hijacking trucks, and Tommy DeVito (Joe Pesci, based on Tommy DeSimone) is an aggressive psychopath with a hair-trigger temper. In late 1967, Henry commits the Air France Robbery and it marks his debut into the big time of organized crime. Enjoying the perks of their criminal activities, the friends spend most of their nights at the Copacabana night club with countless women. Around this time, Henry meets and later marries a no-nonsense Jewish girl from the Five Towns named Karen (Lorraine Bracco). Karen at first is troubled by Henry's criminal activities, but when a neighbor assaults her for refusing his advances, Henry pistol-whips him in front of her, displaying all of the viciousness and confidence of proven gangsters. She feels vindicated, intrigued, and aroused by the act, especially when Henry leaves her the gun he used on her neighbor.
In 1970, Tommy (with Jimmy's help) brutally beats Billy Batts (Frank Vincent), a prominent mobster of the Gambino crime family, for insulting him about being a shoeshine boy in his younger days. However, Batts was a made man, meaning that he could not be touched without the consent of his Gambino family bosses. Realizing that this was an offense that could get all of them killed, Jimmy, Henry, and Tommy place the bloodied Batts in the trunk of Henry's car with the intent of burying him upstate, then drive to Tommy's mother's house to retrieve the tools needed to do so. They manage to bury Batts in the intended area, but six months later Jimmy learns that the burial spot will be the site of a new property development. Thus, they are forced to exhume Batts' half-decomposed corpse and move it to another location.