Silly toupee

I don't think it was a toupee, I believe it was his own hair just styled different

At the beginning of the shoot, there was a debate over Michael Corleone’s hair:

Pacino wanted to keep it like it was in the first two films, but Coppola thought it should be evidence of the character’s age and stature—"like cutting Samson’s hair" he said

Coppola ended up cutting Pacino’s hair himself [That explains it!]