In the 14th and 15th centuries, northern-central Italy was divided into a number of warring city-states, the rest of the peninsula being occupied by the larger Papal States and the Kingdom of Sicily, referred to here as Naples. The strongest among these city-states gradually absorbed the surrounding territories giving birth to the Signorie, regional states often led by merchant families which founded local dynasties.

War between the city-states was endemic, and primarily fought by armies of mercenaries known as condottieri, bands of soldiers drawn from around Europe, especially Germany and Switzerland, led largely by Italian captains. Decades of fighting eventually saw Florence, Milan and Republic of Venice emerged as the dominant players that agreed to the Peace of Lodi in 1454, which saw relative calm brought to the region for the first time in centuries. This peace would hold for the next forty years. The Renaissance, a period of vigorous revival of the arts and culture, originated in Italy thanks to a number of factors, as the great wealth accumulated by merchant cities, the patronage of its dominant families like the Medici of Florence and the migration of Greek scholars and texts to Italy following the Conquest of Constantinople at the hands of the Ottoman Turks.

The Italian Renaissance peaked in the mid-16th century as foreign invasions plunged the region into the turmoil of the Italian Wars. The ideas and ideals of the Renaissance soon spread into Northern Europe, France, England and much of Europe. In the meantime, the discovery of the Americas, the new routes to Asia discovered by the Portuguese and the rise of the Ottoman Empire, all factors which eroded the traditional Italian dominance in trade with the East, caused a long economic decline in the peninsula. Following the Italian Wars (1494 to 1559), ignited by the rivalry between France and Spain, the city-states gradually lost their independence and came under foreign domination, first under Spain (1559 to 1713) and then Austria (1713 to 1796). In 1629-1631, a new outburst of plague claimed about 14% of Italy’s population.

In addition, as the Spanish Empire started to decline in the 17th century, so did its possessions in Naples, Sicily, Sardinia, and Milan. In particular, Southern Italy was impoverished and cut off from the mainstream of events in Europe. In the 18th century, as a result of the War of Spanish Succession, Austria replaced Spain as the dominant foreign power, while the House of Savoy emerged as a regional power expanding to Piedmont and Sardinia. In the same century, the two-century long decline was interrupted by the economic and state reforms pursued in several states by the ruling élites.

During the Napoleonic Wars, northern-central Italy was invaded and reorganised as a new Kingdom of Italy, a client state of the French Empire,Napoleon Bonaparte, "The Economy of the Empire in Italy: Instructions from Napoleon to Eugène, Viceroy of Italy," while the southern half of the peninsula was administered by Joachim Murat, Napoleon's brother-in-law, who was crowned as King of Naples. The 1814 Congress of Vienna restored the situation of the late 18th century, but the ideals of the French Revolution could not be eradicated, and soon re-surfaced during the political upheavals that characterised the first part of the 19th century.