Police removed the 60 year old from his post at the San Camillo site in Forli near Bologna after clients were found tied to beds, chairs and sofas.
Officers provided undercover video footage which showed one person hoisting up an armchair he was bound to so he could move.
According to Forli commander Mario Paternoster, half a dozen of the 30 people who lived at the site were regularly tied up, seemingly to prevent free movement.
Officers claim the measure of restraint was apparently taken because San Camillo did not have adequate numbers of workers.
Both the priest and his apprentice have been suspended. Police say a new director has been announced "to guarantee proper and dignified assistance for the patients".