The movie covers different eras in Noodles' life. The earliest times are in the 1920s during Noodles' childhood days in the Lower East Side section of New York. Noodles is a poor kid in a Jewish ghetto struggling to survive along with his friends Patsy, Cockeye and little Dominic. Bugsy, Max and Deborah are introduced as major characters of the movie during this time. A tough and violent life ends up sending Noodles to prison for 12 years.
The movie then moves on to the 1930s, when Noodles is released from prison. Noodles meets up with his old friends who have become major players in bootlegging. Noodles, Max, Patsy and Cockeye get involved in big time mafia criminal activity even though there is conflict between Noodles and Max. Max, Pasty and Cockeye all end up all being shot and killed by the police during a robbery, and Noodles feels guilty and partly blames himself for it.
The year is 1968 when Noodles returns to his old town. During this time he learns that many things that he believed his whole life had been nothing but lies. He learns that the facts he thought had happened on the night his friends were killed were not true. Noodles also learns that one of those friends betrayed him by running him out of town, taking his money and stealing his woman.