Costello was born Francesco Castiglia on January 26, 1891, in Lauropoli, a frazione of the town of Cassano allo Ionio in the province of Cosenza in the Calabria region, Italy.

[1] In 1895, he boarded a ship to the United States with his mother and his brother Edward to join their father, who had moved to New York City's East Harlem several years earlier and opened a small neighborhood Italian grocery store.

[3][4] The young Italians' success let them make business deals with the leading Jewish and Irish criminals of the era, including Dutch Schultz, Owney "the Killer" Madden and William "Big Bill" Dwyer.

Rothstein became a mentor to Costello, Luciano, Lansky and Siegel while they conducted bootlegging business with Bronx beer baron Schultz.

This caused friction between Madden and a top Dwyer lieutenant, Charles "Vannie" Higgins, who believed he should have been running the Combine instead of Costello.

In the late 1920s, Johnny Torrio helped to organize a loose cartel of East Coast bootleggers, the Big Seven, in which a number of prominent gangsters, including Costello, Luciano, Longy Zwillman, Joe Adonis, and Meyer Lansky played a part.

Torrio also supported creation of a national body that would prevent the sort of all-out turf wars between gangs that had broken out in Chicago and New York.

His idea was well received,[8] and a conference was hosted in Atlantic City by Torrio, Lansky, Luciano and Costello in May 1929; the National Crime Syndicate was created.

[3] On April 15, 1931, Luciano had lured Masseria to a meeting where he was murdered at a restaurant called Nuova Villa Tammaro on Coney Island.

[10][3] While they played cards, Luciano allegedly excused himself to the bathroom, with the gunmen reportedly being Genovese, Albert Anastasia, Joe Adonis, and Benjamin "Bugsy" Siegel;[11] Ciro "The Artichoke King" Terranova drove the getaway car, but legend has it that he was too shaken up to drive away and had to be shoved out of the driver's seat by Siegel.

[15][16] After assassinating Maranzano, Luciano subsequently created The Commission to serve as the governing body for organized crime.

He controlled the slot machine and bookmaking operations for the family with associate Philip "Dandy Phil" Kastel.

Costello placed approximately 25,000 slot machines in bars, restaurants, cafes, drugstores, gas stations, and bus stops throughout New York.

In 1934, Mayor Fiorello La Guardia confiscated thousands of Costello's slot machines, loaded them on a barge, and dumped them into the river.

[18] Costello continued to cultivate those relationships over the next two decades, intervening in Tammany's affairs and collecting favors and pledges of loyalty from those politicians and judges he had helped, including William O'Dwyer, the two-term Mayor of New York City in the 1940s.

Costello attempted to minimize the impact of these hearings on his reputation when he was called as a witness, refusing to allow his face to be filmed during his questioning.

[26] His demands had the opposite effect, as the news cameras focused instead on his hands as Costello fidgeted throughout the hearings, broadcasting his evasive answers and nervous gestures live to a huge nationwide audience.

[28] In 1952, the government began proceedings to strip Costello of his U.S. citizenship, and he was indicted for evasion of $73,417 in income taxes between 1946 and 1949 ($870,113 in 2024 dollars).

[33] Carlo Gambino was expected to be proclaimed boss of Anastasia's family at the November 14, 1957 Apalachin Meeting that Genovese called to discuss the future of Cosa Nostra in light of his takeover.

[5] Cosa Nostra bosses and old associates such as Gambino and Lucchese still paid visits to Costello at his Waldorf Astoria penthouse, seeking advice on important Mafia affairs.

[5] Costello's sedate memorial service at a Manhattan funeral home was attended by 50 relatives, friends, and law enforcement agents.

In 1974, after his enemy Carmine Galante was released from prison, he allegedly ordered the bombing of the doors to Costello's mausoleum.