The Caprera ship had aboard more than 700 kg of contraband cigarettes, a total of 3,600 cartons in 72 boxes, according to the website of TV programme Le Iene.
The vessel had spent three and a half months in the port of Tripoli on an assistance mission with the Libyan coastguard to intercept and rescue migrant boats in the mediterranean.
When the Caprera returned to the southern Italian base of Brindisi in mid-July, the commander ordered a complete search that revealed the crates of foreign cigarettes, according to a statement from the navy.
The cigarettes have been seized and a judicial inquiry and internal investigation has begun.
The Caprera ship, which had once been part of the Italian navy's former Mare Nostrum rescue operation in the Mediterranean, had spent 108 days in Libya assisting the Libyan coast guard to identify departing vessels carrying migrants bound for Italy, according to a report in Italian daily Repubblica.
The cigarettes had been discovered after a routine check when the boat docked in Brindisi on July 16th this year. A member of the navy was stopped by Italy's financial crime police, the Guardia di Finanza (GdF), carrying a bag full of the cigarettes on the same night, according to Il Mattino. The GdF then seized the rest. The investigation continues.