Since the 1990s, the families have been renting the homes belonging to the local authorities for between just €5 and €15 a month.
They were also exempt from paying gas and electricity bills.
The properties are located a stone's throw from the Royal Botanical Gardens in the grounds of the Palace of Caserta, an 18th Bourbon mansion near Naples, which is often dubbed 'the Italian Versailles' as it was inspired by France's Palace of Versailles.
Over the past two decades the families, believed to be ex-employees of the palace and their descendants, have been free to roam the fountain-filled grounds of the Unesco World Heritage site which stretches for some 120 hectares.
The Court of Audit is now investigating how they received such favourable rates, opening a probe into possible "abuse of office", Il Fatto Quotidiano reported.
The families were issued with eviction notices, but only one family has left, a spokerperson for the palace told the newspaper.
The spokesperson was unavailable for comment when contacted by The Local.
The eviction notices were issued before Italy’s Culture Ministry hired Tomasso Felicori to take over as director of the palace last year as part of its aim to revive the country’s cultural treasures.
Felicori, who recently received an unusual complaint from trade unions – that he “worked too hard” – made a statement on Facebook about the remaining lodgers.
“All the tenants have legal contracts on questionable terms,” he wrote.
“They were served with an eviction notice by my predecessor and if they haven't done so already they should get ready to leave.”
The latest revelations come less than a month after an investigation exposed hundreds of properties in Rome, owned the authorities, that were being rented at rock bottom prices, costing the city some €100 million in lost revenue.