On 13 May 1978, the Italian Parliament approved Law 180, universally known as ‘Basaglia Law’ after the name of the leader of the anti-institutional movement which promoted this radical community mental health care reform. Forty years later, Italian psychiatry still runs a community care system, albeit with degrees of solidity and quality very varied along the peninsula. Mental health care is still an integral part of the National Health System, with liberal regulations on coercion and a lowest number of general hospital and residential facilities beds. Recently, Italy has also closed the special forensic psychiatric institutions and brought the care of the mentally ill offenders within the responsibilities of local Mental Health Departments. Over time, psychiatric deinstitutionalisation inspired policies in other sectors of Italian society, such as those regarding physical and intellectual disabilities, education of children with special needs, drug addictions and management of deviant minors. Furthermore, debate about Law 180 has reached and maintained an international dimension, becoming a term of reference for international agencies such as the World Health Organization and the European Commission, for good and for evil. The overall balance sheet of the Reform process would seem mostly positive, though the last decade has seen many threats challenging the system. Mental health care services have been asked to do much more, in terms of care to a larger population with very diversified needs, but with much less resources, due to the financial consequences of the economic crisis. Although there is no evidence of a trend towards re-institutionalisation, intensity and quality of care may have fallen below acceptable standards in some parts of Italy.