The animals had been bred and sold to unsuspecting owners for up to €5,000, according to Enci, the Italian organization responsible for dog pedigree registration.
A couple from Serramazzoni near Modena are suspected of carrying out the cross-breeding, while a further nine Italian farms were involved: in the Alpine region of Tuscany and Emilia Romagna, Calabria and Campania.
At least 229 animal-lovers bought the hybrid beasts, unaware that they were unsuitable as domestic pets.
One of the officers involved in the investigation, Daniela Piccoli, said that the animals were bred to be "especially beautiful, and more resistant to diseases - but they also had a more aggressive character".
"This is a preventative operation, and one which aims to protect the owners who were unaware of having bought potentially aggressive animals at a high price, which were the product of dangerous cross-breeding," said Piccoli, speaking to Ansa. "This allows us to make dog-lovers aware of the risk."
The breeders had created fake pedigrees for the puppies, claiming that they were purebred Czechoslovakian Wolfdogs. They will , now face charges of forgery and commercial fraud.
The Czechoslovakian Wolfdog is itself a relatively new breed, first created in the 1950's by crossing wolves with German Shepherds for military purposes. The first puppies arrived in Italy in 1997, and the breed has become popular among farmers, though in the UK they were classified as a 'Dangerous Animal' until ten years ago.
The dogs were crossed with a variety of wolves, including Scandinavian or North American breeds as well as the Carpathian breed native to Italy.
A court in Modena ordered the dogs to be seized on Sunday, following a three-year investigation by Italy's police, which had been dubbed 'Ave Lupo'.
However, the majority will remain with their new owners for their wellbeing, police said, having formed strong bonds with them after being bought as puppies.