The 55-year-old, from Corna di Darfo parish near the Lombardy city of Brescia, allegedly abused the boy, of foreign origin, from when he was aged 12 until he reached 14.
The priest, who has been suspended from the parish, is alleged to have said to the child that if he told anyone about the abuse then he would go to hell.
The boy, who attended the parish in order to be baptized, eventually confided in a priest in Milan, who told him to tell police.
Some 850 priests have been defrocked for child abuse over the last decade, but according to research conducted earlier this year by L’Abuso, an Italian association for the victims of paedophilia by priests, many have not been brought to justice.
In May, an Italian priest awaiting a criminal trial for sex abuse of minors, due to begin this month, agreed to pay €125,000 in compensation to the families of five of his alleged victims.
Mauro Inzoli, 66, was defrocked in 2012 after he was first accused of paedophilia but that decision was reversed in 2014, when Pope Francis ordered him to stay away from minors and retire to "a life of prayer and humble discretion."
An outcry over Inzoli's treatment led to criminal proceedings being initiated against him in the northern Italian town of Cremona but the Church has reportedly refused to hand over details of its own investigation.
Inzoli, dubbed "Don Mercedes" by the press for his penchant for luxury cars, will be tried for abusing minors aged between 10 and 16 years between 2004 and 2008. He faces up to 12 years in prison.
The perceived leniency of his treatment has angered critics who say the Church is still too reticent about handing paedophile priests over to the criminal authorities.
In March, the Vatican admitted there was "still much to be done" to combat clerical paedophilia in many countries.