The minister has accused Vatican Radio of exceeding Italian laws on radiation and of being a health hazard.
The threat came despite a Vatican offer to cut some of its transmissions after Easter.
Italian Environment Minister Willer Bordon said the offer was "absolutely insufficient".
The minister has accused Vatican Radio of exceeding Italian laws on radiation and of being a health hazard.
Mr Bordon told a news conference in Rome that he wanted a timetable from the radio station illustrating by when it would abide by the government's regulations for electromagnetic emissions.
"We have negotiated until the last [moment] to avoid taking measures we don't want to take," he said.
"We want Italian law to be respected but we also don't want to prevent the voice of the Pope from reaching all parts of the world."
Last month, Mr Bordon threatened to cut off all electricity to the radio's transmission centre on Rome's outskirts.
Residents have claimed that the radio's transmitters have led to a higher incidence of leukaemia in the area.
'Unjustified alarm'
Vatican Radio spokesman Joaquin Navarro-Valls said the government had raised "unjustified alarm" and rejected allegations that the Vatican did not care about the health of local residents.
On Monday the station, which broadcasts the Pope's speeches and events to the world in some 40 languages, said it would reduce half of its medium-wave transmissions, after tests ordered by the environment ministry confirmed that the transmissions violated Italian standards.
Vatican Radio said it wanted to seek a long-term solution on transmission levels that would "minimise the risk to the population".
Like Vatican City itself, the transmission centre is on extraterritorial land and considered part of the sovereign Vatican state.
Last month, Mr Bordon said the National Agency for the Protection of the Environment had registered three times the legal limit for electro-magnetic radiation during one evening broadcast.
Since Vatican Radio was set up 44 years ago, Italy has introduced the European Union's toughest limits on such radiation, dubbed "electrosmog" by the Italian media.