Sacchi, a renowned football coach and innovator who notably helped Milan to back-to-back European Cups in 1989 and 1990, was speaking at an awards ceremony in Montecatini Terme on Monday evening.
According to a website report on La Gazzetta dello Sport, the 68-year-old Sacchi used the occasion to hit out at the number of non-native Italians involved in the lower ranks of Italian football.
"Italy now has no dignity or pride, because we have too many foreigners playing in the under-20 leagues: in our youth sectors there are too many blacks," said Sacchi, a former director of Italy's national team at under-21 level.
Sacchi claimed he was not racist because he signed a player like Frank Rijkaard, a Dutchman of Surinamese origin.
But he insisted that 'too many coloured players' featured for Italian youth sides at the famous Viareggio tournament, known in footballing circles as the Viareggio Cup World Football Tournament.
"I'm certainly not racist, as my coaching history demonstrates with Rijkaard," added Sacchi.
"But look at the Viareggio tournament. I would say that there are too many coloured players, also in the under-20 teams in Italy."
When asked to clarify his remarks, Sacchi claims he had been misinterpreted.
"I've been misinterpreted, you think I'm really racist? All I said was I saw a game featuring a team who fielded four coloured players," he added.
My history speaks for itself, I've always coached teams with great players from every colour and I've brought in a lot, whether to Milan or (Real) Madrid.
"I only wanted to underline that we are losing our national pride and identity."