Reports suggest that a man named Abderrahim Moutahrrick, a Morrocan living in Italy, had been told by Islamic State (IS) to attack the Vatican, as well as the Israeli embassy in the capital city.
It is thought that the leader of IS sent the order and that it allegedly came from another man authorities have named as Mohamed Koraichi.
Another three suspects have been arrested in the country and there are arrest warrants out for a further two people, believed to be in Syria.
Authorities said Abderrahim Moutahrrick received a WhatsApp message from IS saying: "Dear brother Abderrahim, I send you... the bomb poem... listen to the sheik and strike."
Milan prosecutor Maurizio Romanelli said Mr Moutahrrick planned to attack the global centre of Catholicism.
Another suspect, Moroccan-born Abderrahmane Khachia, 23, was also recorded speaking in a monitored conversation saying: "I want to hit Israel in Rome."
He was later arrested in northern Italy according to NewsWeek.
Prosecuting, Romanelli, said investigators managed to intercept the messages.
He said: "This is a new profile, because it was not a generic indication, but an indication given to a specific person who was invited to act within the territory of the Italian state."
Arrest warrants have been issued for an Italian-Moroccan pair who travelled to Syria last year - the male has been named as Mohamed Koraichi.
He is allegedly the man that directed Moutahrrick to carry out the attacks in Italy.
Operazione stamani anti estremisti al nord molto importante. Complimenti a ministro, intelligence, inquirenti e forze ordine #tuttiinsieme
— Matteo Renzi (@matteorenzi) 28 April 2016
The Italian Prime Minister Matteo Renzi thanked authorities on social media, saying "Very important anti-extremist operation in north this morning. Compliments to the ministry, intelligence (services), investigators and police forces #alltogether."
