Quoting Why Didn’t the Press Shout?: American & International Journalism During the Holocaust, page 341:

On September 1, 1938, citing public safety, the government forbade “foreigners of the Jewish race to establish permanent residence on Italian soil, in Libya, on it Italy’s Aegean possessions” and on September 7 revoked the “concession of Italian citizenship to Jews contracted after January 1, 1919,” and gave them six months to leave the country.

(Confusingly, some sources such as Katy Hull’s The Machine Has a Soul: American Sympathy with Italian Fascism conflate these days and suggest that Rome issued the time limit on ‘foreign’ Jews on September 1st, but apparently it was really September 7th; you can see from the above how the confusion resulted.)

The law applied to at least 7,000 people (possibly as many as 10,000), but only 3,720 of them had left by March 1939.

Quoting Gene Bernardini’s 1977 article The Origins and Development of Racial Anti‐Semitism in Fascist Italy:

[Mussolini’s] decision to formulate a policy which would weld together racism and anti‐Semitism was purely voluntary and flowed naturally from the confluence of Italy’s imperial policies, the ideological tenets of fascism, and Italian national interests as enunciated by the Duce. It was not, as some observers believed, imposed upon Mussolini by official German pressure.¹⁰

From Klaus Voigt in Jews in Italy under Fascist and Nazi Rule, page 185:

Until the enactment of the racial laws, Fascist Italy had granted admission to Jewish refugees from territories under [the Third Reich]. Their situation then suffered a drastic setback with the decree of September 7, 1938, which threatened with expulsion the great majority of Jews who had entered Italy as immigrants or refugees after 1918 if they did not leave the country within six months.

The expulsion, however, proved impracticable: by the time the deadline expired, approximately one half of the 9,000 Jews affected by the decree, 4,500 of whom were refugees from Germany and Austria, were as yet without visas to another country and therefore unable to leave Italy. Until August 1939, Jews could still enter Italy with a tourist visa, which enabled them to remain in the country up to six months. When authorities realized that 5,000 mostly destitute people had used this kind of visa only to flee [the Third Reich’s] persecution, it was suspended.

After that, and until May 1940, entry into the country was allowed only on a transit visa in order to board a ship in an Italian harbor. When [Fascist] Italy entered the war in June 1940, the border was closed to Jews. After Yugoslavia’s defeat, this ban was extended to include the territories annexed by Italy.¹¹

I would like to talk more generally about antisemitism in Fascist Italy. Many summarize Fascist Italy pre‐1938 was a period of ‘relative tolerance’ for Jews, but this summary leaves a lot unsaid. Benito Mussolini made antisemitic remarks even before the 1930s (though he was usually careful when and where to say them). For example, quoting from Giorgio Fabre in Jews in Italy under Fascist and Nazi Rule, page 60:

Mussolini in Il Popolo d’Italia on June 4, 1919, published his famous piece (“The Accomplices,” “I complici”) against Jewish Bolshevik leaders whom he claimed had been financed by Jewish American bankers[.]

Other Fascists were also quite tolerant of antisemites. Pages 60–1:

Preziosi’s magazine, La Vita Italiana, was transformed into an anti‐Semitic publication, this took on for the Fascist movement and then for the National Fascist Party (PNF) a heavily anti‐Jewish significance, which was reinforced when the magazine was joined by another anti‐Semitic periodical, the Rivista di Milano. Robert Michels, sharp‐eyed as usual, pointed this out immediately in December 1922.¹⁹ Nor was he the only one to do so.

The newspaper of the small and democratic Republican Party (the party inspired by Giuseppe Mazzini) made a very similar comment.²⁰ The symbolic climax in this anti‐Jewish operation came a little later, on March 1, 1923, when the anti‐Semite Pantaleoni was appointed senator under the first Mussolini‐led government and at Mussolini’s wish.²¹ For the very first time in Italy, a party had an official or semiofficial anti‐Semitic wing.

When something similar had happened before the war in the Nationalist Association — a small “nationalist association” which, after the war, set up a real influent party — the “association” had split in two.²²

Mussolini himself impressed a personal anti‐Jewish mark upon Fascism: his devastating hostility against the Jewish political élite, first and foremost against the élite of the socialist or communist “enemy.” Michels’s intuition, that anti‐Semitism was the result of a struggle within the socialist leadership, was borne out by Mussolini’s course of action after he left the socialist party and founded a movement that was in some respects a competitor of the former.

Take heed to the following! Pages 61–2:

Although this article is similarly anonymous and is not included in his Opera Omnia (Collected Works), it can nevertheless be attributed to Mussolini.²⁴ It is dated September 1, 1921, and in it Mussolini commented on the Zionist conference at Karlsbad, which had been attended by Dante Lattes and other Italian delegates. Alluding to them, Mussolini wrote that there were “Jews who are fed up with living [in Italy], which is something that does not trouble us in the least.”

The “anonymous” writer of Il Popolo d’Italia then added, “If Italian — so‐called Italian! — Zionists were to move elsewhere and take with them the whole pack of Treveses, Modiglianis, Musattis, Momiglianos, Sacerdotis (Genosse), Passiglis and that fine Mr. Ottolenghi who has regaled Italy with several strikes of the postal service, it would afford us great pleasure to expedite this ‘exodus.’”²⁵

For us anti‐Zionists, the fact that Fascist Italy initially supported Zionism while also tolerating antisemitism is unsurprising. After all, surely any fervent antisemite would prefer that Jews leave his country as soon as possible rather than stay in it!

True, both Fascist Italy and the Third Reich would later oppose mainstream Zionism, but it was not so much Zionism per se that bothered them as it was the British Empire, which held Palestine at that time and came increasingly in conflict with the Fascist empires:

Mussolini’s anti‐Zionism, Vital explained, was not directed against Zionism as such, but against England. “If an agreement is ultimately signed with England, the City in London will give him [Mussolini] a loan, and then Mussolini will change tack on anti‐Zionism”.⁹⁹

(Source.)

Thus the Fascists later suggested easier alternatives to Palestine, most infamously Madagascar, but also Ethiopia. Keep in mind that the original Zionists themselves proposed their own alternatives to Palestine, such as Patagonia and Uganda.

It is also helpful to examine the Jews who joined the PNF (the subject of the book Italy’s Fascist Jews: Insights on an Unusual Scenario), as this helps illuminate how Fascist antisemitism manifested in subtler ways. Page 63:

[A]s a matter of fact, no Jew had ever held a truly leading post in the party. Gino Arias, the famous nationalist economist, who was a Jew and would receive the party membership card on May 1, 1923, was in fact invited to the momentous Fascist congress held in Naples on October 25, 1922.³⁰ But he was quite definitely only a guest. Mussolini himself wrote an extremely chilly and disconcerting letter concerning his invitation, saying that his participation was “not impossible.”³¹

Margherita Sarfatti’s situation, around that time, was in many ways similar. Maybe she was indeed Mussolini’s mistress. And in any case, her being a woman complicated things. In January 1922, when she had in fact a post of some importance, as the editor of the cultural review Gerarchia (of which Mussolini was the editor in chief), her name did not appear. She officially appeared as “direttore responsabile” (that is solely as the person legally responsible in front of authorities) only in February 1925.

(Emphasis added in all cases. It may be useful to compare this to the Nixon régime: a Zionist circle that had some token Jews but manifested antisemitism anyway.)

Thus we see that antisemitism was present in Fascist Italy even before it evolved into a systematic phenomenon in the late 1930s. Indeed, one could argue that Fascism, even at its most tolerant, could not help but be antisemitic, because it was an ultranationalist phenomenon whereas Jews have almost always been a very international people. See how Libyan Jews fared under Fascism for a good example of pre‐1930s Fascist antisemitism.