Act 1 - Mr. Alfieri, a lawyer in the small Brooklyn community of Red Hook, narrates the story of Eddie Carbone, an Italian American longshoreman who lives with his wife Beatrice and her orphaned niece Catherine. He warns the audience at an early point that Eddie's story is a tragic one, memorable for its impact on the community. Eddie is protective and fatherly towards Catherine, who is undertaking study to become a stenographer, a venture which is funded by Eddie. However, he is resistant to letting her grow up, shown early on as he objects to her taking a job without fully finishing her course. Beatrice, on the other hand, is more supportive of Catherine's ventures, recognizing she needs to be her own woman, and often acts as a mediator between the two. Eddie returns home one afternoon with the news that Beatrice's two cousins, brothers Marco and Rodolpho, have safely arrived in New York as illegal immigrants. He has agreed to house them. Marco is quiet and thoughtful, possessing a remarkable strength, whereas Rodolpho is more unconventional, with plans to live off a career singing in America. Marco has a family starving in Italy and plans to return after working illegally for several years, whereas Rodolpho intends to stay. Although Eddie, Beatrice and Catherine are at first excellent hosts, cracks appear when Rodolpho and Catherine begin dating, without Eddie's permission. Due to his protective nature, he is unhappy with this.
Rodolpho gains a reputation with his colleagues for his effeminate nature, which includes singing and the fact he has blonde hair. A rumour suggests that he may be homosexual, worrying Eddie as he begins to believe that Rodolpho is expressing interest in Catherine so he can marry her and gain status as a legal citizen. Beatrice is troubled by his suspicious nature, as he becomes withdrawn and they stop sleeping together. Her advice is rejected, and Eddie instead turns to Alfieri for advice, begging for a way to stop Rodolpho and Catherine's romance without revealing Rodolpho and Marco's status as an illegal immigrants. In doing this, Eddie and his family would be quickly shunned out of society. Increasingly desperate with no potential resolution, Eddie takes his anger out on Rodolpho in teaching him to box, and 'accidentally' injures him, causing Marco to quietly threaten him, showing his strength by holding a heavy chair above his head with one hand.
Act 2 - Eddie's paranoia increases, and reaches breaking point when he discovers that Catherine and Rodolpho have slept together and are intent on marrying. Drunk, he attempts to prove that Rodolpho is gay by suddenly passionately kissing him; he also kisses Catherine, an action which prompts Beatrice and Alfieri to become suspicious he has romantic feelings towards his niece. Beatrice arranges for Marco and Rodolpho to move in with two immigrants in the flat above, while Eddie preaches to Alfieri that he believes that the kiss has proved to him that Rodolpho is gay and is only marrying Catherine for citizenship. He then phones immigration services, who arrive and arrest Marco, Rodolpho and the two other immigrants promptly, with the neighbours gathered around. Although Eddie puts on an act that the move is a complete surprise to him, Beatrice and Marco see through this, and Marco spits in Eddie's face in front of everyone, accusing him and taking away Eddie's pride.
Alfieri visits Marco and Rodolpho in custody, releasing them on bail until their trial in six weeks. Rodolpho plans to marry Catherine immediately, suggesting he will be allowed to stay, whereas Alfieri warns Marco that he has no chance. Vengeful, Marco confronts Eddie publicly on his release, and Eddie turns on him with a knife, demanding that he take back his accusations and restore his honour. In the ensuing scuffle, Eddie is stabbed with his own knife and dies, with his family and neighbourhood standing around him.