Col Gaddafi - dressed in full military regalia and heading a 200-member entourage - was given a red-carpet welcome by Prime Minister Silvio Berlusconi at Rome's Ciampino airport.
This is the Libyan leader's first visit to Italy since he took power in a coup in 1969. Italy occupied Libya for 30 years in the early part of the 20th Century and until recently relations have been difficult.
"This event symbolises a great change in the relations between Italy and Libya after many difficult years... ," Mr Berlusconi said as he welcomed him.
"It has required a very strong will to take us to a new season of peace, friendship and collaboration."
"I praise this generation of Italians for having resolved the issues of the past with great courage," Col Gaddafi said.
Security will be tight during the three-day visit, says the BBC's David Willey in Rome.
Demonstrations are planned by left-wing students who are against Mr Berlusconi's policy - with Libyan help - of intercepting and forcibly repatriating immigrants who try to reach Italy by sea.
Human Rights Watch said the policy, part of an Italy-Libya Friendship Treaty had seen about 500 migrants towed to Libya without any screening since 6 May.
"It looks less like friendship and more like a dirty deal to enable Italy to dump migrants and asylum seekers on Libya and evade its obligations," the group said in a statement.
Col Gaddafi is expected to meet his visitors in his Bedouin-style tent which has been set up in the park of a 17th Century Roman villa where he is staying.
He is also due to address a group of 700 Italian women from the fields of business, politics and culture.
He held a similar meeting on a visit to Paris in 2007, and told guests he wanted to "save European women".
A tent has been erected on the grounds of Villa Pamphili in Rome
Col Gaddafi, whose country holds the rotating presidency of the African Union, will return to Rome next month as a delegate to the Group of Eight (G8) summit.
The BBC's Rana Jawad in Tripoli says the two countries have had a love-hate relationship.
Since independence the Italian language has been effectively banned in Libya, while Italian settlers were expelled soon after Col Gaddafi took power and barred from ever returning.
Italy's brutal occupation of Libya, when tens of thousands of Libyans were forcibly moved to concentration camps, was not easily forgotten, our correspondent says.
But in recent years the relationship has flourished and even turned to friendship.
Business deals have surged and expelled settlers are now allowed to visit. Col Gaddafi is accompanied in Italy by a delegation of Libyan businessmen looking to boost their investments in Italian industry.
Last year Rome agreed to pay Libya $5bn (£3bn) in reparations for colonial policies.
However he had attached to the lapel of his military uniform a picture of national hero Omar al-Mukhtar - who was executed by Italian colonial authorities - chained by his captors.
Col Gaddafi travelled to Rome with Omar al-Mukhtar's elderly son, Mohammed Omar al-Mukhtar, who had to be helped off the plane by security guards.
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