In 1979, Michael Corleone, approaching 60, is wracked with guilt over his ruthless rise to power, especially for having ordered Fredo’s assassination. He donates part of his tremendous wealth to charitable causes. Michael and Kay are divorced; their children, Anthony and Mary, live with Kay. At the reception following a papal order induction ceremony in St. Patrick’s Old Cathedral in Michael’s honor, Anthony tells his father that he is leaving law school to become an opera singer. Kay supports his decision, but Michael wants Anthony to complete his law degree first. Michael and Kay have an uneasy reunion when Kay reveals that she and Anthony know the truth about Fredo’s death. Vincent Mancini, the illegitimate son of Sonny Corleone, arrives at the reception. He is embroiled in a feud with Joey Zasa. Connie Corleone arranges for Vincent to meet Zasa, who calls Vincent a bastard, and Vincent bites Zasa’s ear. Michael, who is troubled by Vincent’s fiery temper yet impressed by his loyalty, agrees to include Vincent in the family business.
Michael knows that the head of the Vatican Bank, Archbishop Gilday, has accumulated a massive deficit and offers $600 million in exchange for shares in Internazionale Immobiliare, an international real estate company, which would make him its largest single shareholder with six seats on the company’s 13-member board. He makes a tender offer to buy the Vatican’s 25% share in the company, which will give him controlling interest. Immobiliare’s board quickly approves the offer, pending ratification by the pope.
Don Altobello, a New York Mafia boss and Connie’s godfather, tells Michael that his partners on The Commission want to be in on the Immobiliare deal. Wanting the deal to be free of mafia involvement, Michael pays them from the sale of his Las Vegas holdings. Zasa receives nothing and, declaring Michael his enemy, storms out. Altobello follows Zasa, saying he will reason with him. Moments later, a helicopter hovers outside the conference room and opens fire. Most of the bosses are killed, but Michael, Vincent, and Michael’s bodyguard, Al Neri, escape. Neri tells Michael that the surviving mob bosses made deals with Zasa but Michael realizes that it is Altobello who is the traitor. Michael suffers a diabetic stroke and is hospitalized. As Michael recuperates, Vincent and Mary begin a romantic relationship, while Neri and Connie give Vincent permission to retaliate against Zasa. During a street festival hosted by Zasa’s Italian American civil rights group, Vincent kills Zasa. Michael berates Vincent for his actions and insists that Vincent end his relationship with Mary, explaining Vincent’s involvement in the family’s criminal enterprises endangers her life.
The family goes to Sicily for Anthony’s operatic debut in Palermo at the Teatro Massimo and stays with Don Tommasino. Michael tells Vincent to pretend to defect from the Corleone family in order to spy on Altobello. Altobello introduces Vincent to Don Licio Lucchesi, a powerful Italian political figure and Immobiliare’s chairman. Michael discovers that the Immobiliare deal is an elaborate swindle, arranged by Lucchesi, Gilday, and Vatican accountant Frederick Keinszig. Michael visits Cardinal Lamberto, anticipated being the next pope, to discuss the deal. Lamberto persuades Michael to make his first confession in 30 years. Michael tearfully confesses that he ordered Fredo’s murder, and Lamberto says that Michael deserves to suffer but can be redeemed.
Vincent tells Michael that Altobello has hired Mosca, a veteran hitman, to assassinate Michael. Mosca and his son, disguised as priests, kill Don Tommasino as he returns to his villa. While Michael and Kay tour Sicily, Michael asks for Kay’s forgiveness, and they admit they still love each other. Michael receives word of Tommasino’s death, and at the funeral vows never to sin again. Following the pope’s death, Cardinal Lamberto is elected to succeed him and the Immobiliare deal is ratified. The plotters against the ratification attempt to cover their tracks. Michael sees that his nephew is a changed man and names him the new Don of the Corleone family, telling him to adopt the Corleone name. Vincent ends his romance with Mary.
The family sees Anthony’s performance in Cavalleria rusticana in Palermo while Vincent exacts his revenge:
Keinszig is abducted by Vincent’s men, who smother and then hang him from a bridge, making his death look like a suicide;
Don Altobello, at the opera, is given poisoned cannoli by Connie, who watches him die from her opera box;
Calò, Tommasino’s former bodyguard, meets with Don Lucchesi at his office, claiming to bear a message from Michael. As he whispers the message, Calò stabs Lucchesi in the neck with his own spectacles.
After approving the Immobiliare deal, Lamberto, now the pope, is served poisoned tea by Archbishop Gilday and dies in his sleep. Al Neri travels to the Vatican, where he shoots Archbishop Gilday.
At the opera house during Anthony’s performance, three of Vincent’s men search for Mosca but he overcomes them. Mosca is unable to aim at Michael in the theatre but outside the opera house wounds Michael and kills Mary. Vincent shoots and kills Mosca. Michael cradles Mary’s lifeless body and screams in agony; the scene fades out into a montage of various scenes of Michael’s life across all three films.
Years later, an elderly Michael is alone in the courtyard of Don Tommasino’s villa. Suddenly, he slumps over in his chair and falls to the ground.