To be able to drive in Italy we will need an International Driver's Permit (IDP), which is valid for 1 year and can be obtained at the American Automobile Association (AAA). The IDP is actually based on your US drivers license, sort of an add-on translation. After a year we are supposed to obtain an Italian driver's license.
Because our New Mexico driver's licenses will expire later this year when we are in Italy, we have renewed them now and will obtain the IDP when we get to Ohio. I verified with the AAA office in Norwalk, OH that we can use an out-of-state license to obtain the IDP there. This is a process that again requires 2 passport size photos (see Feb 4 post).
I have also heard from other expats that obtaining vehicle insurance can be expensive in Italy unless you can prove that you have a good driving history, so we also obtained copies of our driving records from the motor vehicle department showing no violations.
This is not to say we are planning to buy a vehicle in Italy, but these are items we would have difficulting obtaining once we are in Italy so just a little planning ahead - or as my Scout training taught me: "Be prepared".