Mafia takes place in the fictional 1930s city of Lost Heaven. The player takes the role of a relatively innocent cabdriver who becomes involved in the underworld of organized crime through a random accident. While between fares one night, the hero is suddenly approached by two shady characters in urgent need of a ride. Fearing a quick shot to the head if he refuses, he accepts the passengers and, thanks to his excellent driving abilities, is able to help them escape the rival gang members that had been chasing them. Quick thinking and good driving skills save the day for the thankful mobsters, who make it a point to remember the main character. When he finds himself out of work a short while later, the hero is graciously welcomed to "the Family."

The third-person adventure in Mafia has the player moving about a 12-square-mile city, designed from authentic photographs and architectural plans from the 1930s. The player will have almost complete freedom to move about the city, exploring and interacting as he sees fit. Each building is unique, providing a sense of location and allowing the players to learn landmarks as they travel through Lost Heaven. A wide variety of missions will have the protagonist racing cars, investigating seedy hangouts, and even executing hits (if his conscience will allow it). Mafia is designed to envelop players in the look and feel of the classic gangster movies that were its inspiration.