Next year's elections, to be held on March 4th, may mark a new era of uncertainty for the country.
With the vote expected to be split between the right, centre-left and the populist Five Star movement, the next parliament could be left without a clear majority.
But in a country that has had 64 governments since 1946, instability is nothing new.
Prime Minister Paolo Gentiloni is the third leader of the parliament that was elected in 2013. He is expected to stay in office until the creation of a new government following elections.
Gentiloni visited Mattarella on Thursday to announce that work was finished on adopting the 2018 budget, which passed last week.
Mattarella then "signed a decree dissolving the Senate and the chamber of deputies", according to a statement from his office, and confirmed March 4th as election day.
Earlier on Thursday, he moved to reassure the nation in a news conference taking stock of his year in office.
"Things that were born a little strangely, as in the case of this 17th legislature, prove to be rather fruitful over time. The truth is that Italy has recovered after the most serious crisis of the post-war era," Gentiloni said.
"Italians know that in the coming weeks the spotlight will be on the election campaign, as is normal," he said.
If no one party wins a clear majority, Mattarella could ask Gentiloni to continue to handle current affairs for many more months.
Unlike his predecessors Matteo Renzi and Silvio Berlusconi, whose popularity stands at 29 and 23 percent respectively, Gentiloni enjoys a healthy positive ranking of 44 percent.
Berlusconi himself seemed to support Gentiloni's continued reign. "He is a kind and moderate person: He will handle this delicate time with tact," the former premier wrote on Twitter.
In his remarks on Thursday, Gentiloni said: "I assure you, my dear fellow citizens, that the government will not slow its pace. Within the limits set by the constitution, by law, the government will govern."