The boat was found 85 miles off the Libyan coast at a depth of 375 metres, the navy said in a statement.
Prosecutors in Sicily who are conducting a homicide investigation into the Mediterranean's worst maritime disaster in decades had asked the navy to find the boat and see whether it would be feasible to salvage it.
An estimated 750 people were on board the boat when it left Libya. Only 28 survived and only 24 bodies were recovered at the scene.
The survivors have recounted how most of the people being smuggled to Italy were locked in the hold or in a lower deck when the boat capsized and sunk following a collision with a merchant ship that had answered its distress call.
Two of the survivors, the Tunisian captain of the boat and a Syrian who allegedly served as crew, are being investigated for suspected culpable homicide, causing a shipwreck, encouraging illegal immigration and illegal confinement.
Prime Minister Matteo Renzi has vowed that, if at all feasible, the boat will be raised and the victims given decent burials.
Meanwhile, an estimated 33,000 migrants have arrived in Italy so far this year, fifteen percent more than during the same period in 2014, according to an interior ministry official.
The country is expecting to receive 200,000 overall for 2015, above last year’s 170,000, Mario Marcone, the head of the civil rights and immigration department at the Interior Ministry, was quoted by Ansa as saying, adding that the influx created a “very difficult” situation.
The department had a €630 million budget for migrant reception last year, a figure that is likely to rise this year as more migrants come, Marcone said.
More than 5,000 refugees have died over the past 18 months when boats operated by smugglers capsized, triggering alarm among European leaders seeking to halt the flow.
Italy is working with UN Security Council members Britain, France, Spain and Lithuania on a draft resolution, which will be presented to the United Nations, on destroying boats used by people smugglers.
The resolution would be drafted under Chapter 7 of the UN charter which allows the use of force and would give an EU maritime force the right to act in Libyan territorial waters, if authorities there give their consent.
But Francesco Rocca, president of the Italian Red Cross, told UN Secretary-General BanKi-moon that instead of resorting to force, more legal avenues must be opened to allow asylum-seekers to reach Europe safely.
EU foreign policy chief Federica Mogherini will brief the 15-member council on Monday on the EU's plans to stem the flow of migrants.