While I would agree with Turnbull that the decision to kill Sollozzo & McCluskey starting everything else in motion, I would add that killing Fredo was Michael's biggest mistake.

It's a fine line because Fredo betrayed Michael and almost got Michael killed. From a business standpoint, Fredo had to go - no question. But when it's your own brother, sometimes you have to look the other way. I think killing Fredo sucked all the humanity out of Michael and he never fully recovered from it. As he asked Don Tommasino's corpse,
Quote
"Why was I so feared, and you so loved? What was it? I was no less honorable. I wanted to do good. What betrayed me? My mind? My heart?"
If it wasn't Michael's biggest mistake, I would certainly think it was the action Michael regretted the most.