As Francis Ford Coppola recounted in an interview with Playboy, he used to joke that he would only make a sequel to The Godfather if it were going to be Abbot and Costello Meet the Godfather. For a long time, he found the idea of creating a sequel to his beloved and artistically-successful film absolutely repulsive. But after months and months of hounding by the Paramount executive Charles Bludhorn — Coppola's biggest personal champion during the making of the first Godfather — Coppola eventually agree to sign on as a writer and producer and help them find a director. His suggestion of Martin Scorcese was rejected by producer Robert Evans, who was at that point still involved with the franchise, leading to Coppola ultimately agreeing to direct it himself.
While Mario Puzo, the author of the novel The Godfather, had turned in a draft for a second Godfather film years earlier, Coppola effectively read over Puzo's draft and started from scratch. Both Puzo and Coppola agreed that the sequel should be about the total ruin of Michael Corleone. Puzo's initial draft was called The Death of Michael Corleone, but Coppola decided that ultimately he wanted Michael to turn into a living corpse. Everything in Michael's life would be totally lost and ruined, despite his wiles making him victorious in seemingly all his pursuits. And indeed, at the end of The Godfather Part II, Michael is left alone with no family or friends to speak of.
Thanks to the success of the first Godfather film, Coppola was able to get an $11 million budget for the sequel and total artistic control with absolutely no studio interference. Thanks to this, Coppola was able to indulge in elaborate flashback sequences to Manhattan's Little Italy during World War I that alluded to his own family's history as Italian immigrants finding their way in, and creating a new, America. Vito's quarantine at Ellis Island is inspired by Coppola's aunt's own quarantine, and Coppola had a good portion of the budget dedicated to transforming a block in Manhattan's Alphabet City into a perfect facsimile of Little Italy.
Paramount executives, chief among them Frank Yablans, were skeptical of Coppola's elaborate flashback structure and insistence on making much of the dialogue in the film Italian subtitled in English. But audiences and critics alike proved game for the risk, thanks in large part to Robert De Niro's electrifying performance as the young Vito Corleone. On the note of acclaim, critics such as Pauline Kael hailed The Godfather Part II as the type of art that could be produced in Hollywood when true artists were left to their own devices. The film had a good year at the 1974 Oscars, getting nominated for all the major categories including winning three Best Supporting Actor nods for different actors in the film. It would win Best Picture, beating out another Coppola-directed film that came out in 1974, The Conversation.
But it wasn't all smooth sailing for The Godfather. Al Pacino's star had risen to such an extent after the first Godfather film that he was working himself ragged in between the two entries in the series. As a result, he came down with a protracted bout of pneumonia that sidelined him for weeks. Coppola blamed, in part, the character he had written for Pacino: a version of Michael Corleone without any cathartic moments, only simmering and mounting failure. The film, thanks to such delays, went over budget by $2 million, bringing the grand total to $13 million. Coppola got lucky when the film was released in 1974, though. It was a box office and critical hit, achieving his goal of being praised as an even better movie than the first Godfather film. Coppola wouldn't always be so lucky in his later career, as his ballooning budgets would fail to line up with critical praise and high ticket sales. In the 1970s, though, Coppola could do no wrong.