By the summer of 1943 the Italian position was hopeless. Northern and eastern Africa had been lost, the northern Italian cities were being regularly bombed, war production was minimal, and morale had collapsed. So too had the Fascist regime, which could no longer command any obedience. Court circles began sounding out Allied terms, which of course included the removal of Mussolini. In July 1943 the Allies invaded Sicily, and within a few weeks they controlled the island. On July 24–25 the Fascist Grand Council met in Rome for the first time since the beginning of the war and passed a motion asking the king to resume his full constitutional powers—that is, to dismiss Mussolini. In a dramatic decision, a substantial majority of the members voted against the duce. The king dismissed Mussolini the same day and installed Marshal Pietro Badoglio, an elderly World War I veteran who had fought in Ethiopia, as prime minister. Spontaneous demonstrations followed throughout the country, in which statues of Mussolini were torn down, Fascist symbols removed, and political prisoners released. At first the authorities did not react, but, in the five days after July 25, troops shot dead 83 demonstrators. The army took over the key positions in Rome, the duce was arrested, and the main Fascist institutions, including the Fascist Party, were dissolved. On July 27 Badoglio formed an interim government that consisted mostly of ex-Fascists.

Badoglio assured Germany and the Italian people that the war would continue, but he also attempted, rather feebly, to reach armistice terms with the Allies. German troops began pouring into Italy. Heavy Allied bombing continued over most Italian cities. Strikes broke out throughout the country. Allied troops arrived on the Italian mainland in early September but met heavy resistance from the Germans at Salerno. The Badoglio government agreed to an armistice with the Allies, and U.S. General Dwight D. Eisenhower, the Allied commander in chief in the Mediterranean, announced it on September 8, 1943. Under this agreement (the so-called Short Armistice), the Italian government promised to cease hostilities against the Allies and end its alliance with Germany.

The Germans immediately took over Rome. In the previous few weeks, they had already taken over most of central and northern Italy. The Italian army, left without orders even to defend Rome, was disintegrating despite some brave spontaneous fighting (the official beginning of the Resistance) at Porta San Paolo. The king and his government fled south to Brindisi, leaving Rome to the Germans. Chaos reigned among Italian troops, and thousands deserted, while others joined the Resistance forces. At Cephallenia, a Greek island, Italian troops refused to obey German orders to give up their arms, and thousands of them were shot or deported. In late September the Badoglio government signed a “Long Armistice,” which virtually gave up military and political control over Italy, as well as control of the mass media and financial institutions, to the Allies. This agreement was not made public during the conflict.

Badoglio officially declared war on Germany on October 13. Italy became a war zone. For 18 months the Allies fought the Germans up the peninsula, wreaking untold devastation throughout the land. The Allies took Naples in October 1943 but reached Rome only in June 1944, Florence in August, and the northern cities in April 1945.

The Allies ruled the south after September 1943, and Badoglio’s government had very little influence on events. The anti-Fascist parties, which detested Badoglio and wanted the king to abdicate, refused to join the government until April 1944, when the Communist Party leader Palmiro Togliatti agreed to do so. Scholars disagree on whether this decision was autonomous or came in response to orders from Moscow. When Rome was liberated, Victor Emmanuel was replaced by his son, Umberto, as “lieutenant general of the realm,” and the leading anti-Fascist parties formed a nominal government led by the reformist Socialist Ivanoe Bonomi, who had been prime minister from 1921 to 1922.