Patrizio Barlone was found by his sister on Monday morning at his home in Monte San Biagio, a town south of Rome.
The 61-year-old had suffered severe head damage and his hands and feet were tied, Corriere della Sera reported.
Barlone is thought to have been killed on Sunday night after a town festival, by people who were well-acquainted with his home.
Forensic police are currently at the scene and people are already being questioned about the murder, Il Messaggero said.
Barlone was a deacon during the 1990s, before reportedly being defrocked for bad behaviour.
Carlo Lembo, secretary of the Gaeta area, on Monday confirmed that Barlone had been ordained a deacon elsewhere. “[He] was subsequently defrocked and forbidden from practicing in any department. Consequently, Mr Barlone was never ordained a priest,” Lembo said in a statement published by La Repubblica.
The former deacon allegedly boasted of having a high clerical rank, friends at the Vatican and contacts in the police, promising favours and jobs to people in exchange for cash.
In 2006 he was arrested on usury charges and received a three-year prison sentence, but continued to pose as a priest.
Last year Barlone went to police in clerical dress to request a CCTV camera be moved because his house was in its view. As a priest he needed to practice privacy and confidentiality, he reportedly told police.
Barlone was then reported for making false statements, Italian media reported. The CCTV camera in question in thought to have captured four people, three men and a woman, entering his house on the night of the murder.