Marco Agostini, 43, formerly the priest of the main church in Pomezia, near Rome, was arrested at the headquarters of his religious order on suspicion of paedophilia and sexual violence. Two other priests based in Pomezia were issued with orders banning them from Rome and the surrounding province.
Prosecutors believe they knew about Agostini's alleged abuses and tried to protect him during the police's investigations. As Father Agostini was arrested in Assisi, police searched parish premises in Pomezia, where he was based until last year.
The two priests accused of covering for Agostini, who were working in the church buildings at the time, received formal notice of the accusations against them. A crowd gathered outside the church of San Benedetto in central Pomezia as the two priests, both trying to hide their faces, were taken away by police.
Several of Agostini's alleged victims were among the crowd, some of them filming the scene with video cameras. "We've waited a long time for this. We don't want to miss anything," one said.
Prosecutors began investigating Agostini in 2004 after a 23-year-old from the town accused the priest of sexually abusing him. Police then interviewed dozens of youths in Pomezia and other parishes in the Rome area where he had been posted.
Many other people claimed to have been his victims, including some who referred to events which allegedly took place 20 years earlier. Prosecutors believe Father Agostino repeatedly abused a group of about 20 youths, all aged 13 or over, who were part of his parish community in Pomezia between 1993 and 2004.
Sources close to the probe said Agostini was transferred from Pomezia last summer, first to Rome and then to Assisi where he is now running a youth hostel. Religious authorities apparently began procedures to defrock Father Agostino soon after he was transferred to Assisi.
Father Fortunato di Noto, founder of a Catholic association which campaigns against paedophilia and the sexual exploitation of minors, said he felt a certain "trepidation" as he waited to hear the facts of the case. "The whole of society is waiting for clarity and the facts. Let's not forget that the Church has always battled against paedophilia," he said.
While the Catholic Church in the United States and many other countries has been rocked in recent years by paedophilia scandals, the Italian Church has until now emerged relatively unscathed.