The 4.4 percent increase in tourist numbers since the last record was set in 2016 is well above the European average, according to new figures from Istat.
Most of Italy's tourists (14.1 percent) come from Germany, the figures show, followed by France, the UK and US, which had about three percent each.
Rome remains the most popular destination, attracting almost 27 million of these visitors, or 6.4 percent of the total, followed by Milan, Venice (both 2.8 percent), Florence (2.4 percent) and Rimini (1.8 percent.)
— Istat (@istat_it) November 27, 2018
More than 275 million people stayed in hotels in Italy in 2017. There was a 2.8 percent increase in the number of people staying in Italian hotels, with an average stay of 2.9 nights recorded per customer.
Non-hotel accommodation, which includes agriturismi (farm stays) and Airbnb, recorded a 7.5 percent increase and an average stay of 4.9 nights.
For the first time, the number of non-Italians staying in hotels and other accommodation outnumbered Italian residents, who frequently travel within their home country.
A tourist studies a map in the Vatican City. Photo: lightpoet/Depositphotos
88 percent of trips taken by Italians within Italy are thought to be for holidays and leisure, while the remaining 12 percent are business trips.
Statistically, growth has been stronger in the south, with the number of visitors to Sicily growing by 7.3 percent and Basilicata by 6.5% However, the south continues to make less money from tourism than the centre and northern regions, despite visitors tending to stay longer there.
Italy's tourism sector makes up some 12 percent of national GDP and accounts for almost 13 percent of Italian jobs according to a study carried out by the Intesa Sanpaolo group.
But not everyone in Italy is happy about the large numbers of people arriving every year.
The influx, however profitable, takes a considerable toll on quality of life for local people, and can put the survival of Italy's heritage at risk – despite it being key to Italy’s high profile as a travel destination.
Many of Italy's most established tourist destinations suffer from overcrowding, especially in the peak summer season.
An anti-tourism movement is growing in some of the country's most popular beauty spots including Venice and the towns of Cinque Terre, where local residents have protested against overcrowding in their cities and an impact on liveability.
One of the government's priorities is to promote smaller destinations and authentic craftsmanship, gastronomy and wine tourism as a way of evening out visitor numbers and revenues throughout the year.
2017 was named the Italian 'Year of the Village', and the Culture Ministry reported an increase of 74 percent in tourism to rural areas this year, based on figures provided by Airbnb.