At the outbreak of World War II, Italy had a formidable navy that included two modern battleships, four rebuilt older battleships, and 19 cruisers in addition to 100 smaller surface craft and 113 submarines. These vessels were manned by 168,614 officers and sailors at the beginning of the war, growing to 259,000 at peak strength in August 1943. Italian naval personnel were much better trained than either their army or air force counterparts, but while the roster of ships looked impressive on paper, the fleet was outclassed by the navies of the Allies. Italian vessels lacked radar, their guns were generally inferior to those of Allied vessels (of significantly shorter range), and, perhaps most serious of all, the navy suffered from a shortage of fuel oil. Another major shortcoming was the complete lack of aircraft carriers. Finally, there was a problem with command philosophy. Italian naval officers were extremely conservative and saw their principal objective as preserving the navy intact; they were, therefore, reluctant to put ships at risk and never deployed their naval assets aggressively or effectively.

Despite the conservative philosophy, the Italian navy suffered a severe blow early in the war at the Battle of Taranto on November 12, 1940, when British aircraft badly damaged one new battleship and two older ones, along with a cruiser and dock facilities. This disaster was followed on March 28, 1941, by the Battle of Matapan, in which three cruisers and their escort vessels were sunk, and the battleship Vittorio Veneto, pride of the fleet, was badly damaged. More successful were Italian submarine operations against British convoys. Italian supply operations to troops in Libya were also quite successful, despite British efforts at interdiction.

At the time of Italy's armistice with the Allies in September 1943, the navy had six battleships and nine cruisers. Its fleet of smaller vessels and submarines had been decimated. In all, losses were a battleship, 12 cruisers, 44 destroyers, 41 torpedo boats, 75 submarines, and 171 smaller vessels.

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