Originally a hedge against the death penalty, the insanity defense came to offer hospitalization as an alternative to imprisonment. In the late 19th century Italy opened inpatient services first for mentally ill prisoners and then for offenders found not guilty by reason of insanity. Within the past decade, a series of decrees has resulted in transferring the responsibility for treating NGRI acquittees and “dangerous” mentally ill prisoners from the Department of Justice to the Department of Health, and their treatment from Italy's high security forensic psychiatric hospitals (OPGs) to community regional facilities (REMSs, Residences for the Execution of Security Measures), community mental health facilities, one of which is located in each region of Italy. Today community REMSs provide the treatment and management of socially dangerous offenders. The dynamic evolution of Italy's progressive mental health system for insanity acquittees, to our knowledge the most libertarian, community oriented approach of any country, is retraced. Discussion includes cautionary concerns as well as potential opportunities for improvements in mental health services. Copyright © 2016 John Wiley & Sons, Ltd.