Police responding to a 911 call about an assault in progress just after 9.15pm arrived to find 53-year-old Cali with six gunshot wounds to the torso. It has been led in the past by infamous mobsters such as Carlo Gambino and John Gotti.
Cali was believed to have been elevated to the position of acting boss in 2015, taking over from Domenico "Greaseball" Cefalu.
Police were searching for the pickup truck that raced from the grisly scene, sources said.
The Gambino family was once considered the biggest organised crime group in the U.S., the New York Times reports, but began to decline after Gotti and other senior figures were jailed.
The influence of the Gambinos waned in the 1990s after a number of members turned government informers and several leaders were imprisoned.
Cali's only criminal conviction came from an extortion charge in 2008 for trying to shake down a trucker; he spent 16 months in prison.
After exiting a limousine outside the restaurant, Castellano and his underboss, Thomas Bilotti, were approached by three men in trench coats who shot them each about six times, the New York Times reported at the time.
It was a marked change from the Gotti era, which brought with its unnecessary attention and exposure. The house is listed under the name of Rosaria Inzerillo.
Cali, who was born and raised in NY, was the nephew-in-law of John Gambino and the great-nephew of Bonanno mobsters Vito Bonventre and Giovanni Bonventre.
He rose quickly through the ranks of organized crime, becoming a powerful capo before the age of 40, less than a decade after he became an inducted member, according to court papers.
Cali, who was known throughout his life as "Franky Boy", is the nephew-in-law of Sicilian mobster John Gambino and had close ties to the Sicilian Mafia family led by Salvatore Inzerillo.
Cali's distraught family members rushed outside after the shooting.
On June 4, 2008, Cali pleaded guilty to conspiring to extort money.
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