Armed men in two cars stopped a minibus carrying 10 foreigners as it was driving through the town of Khan Younis, other passengers said. They forced the Italian out and into one of their cars before speeding away.
Luisa Morgantini, a European parliament deputy who was on the bus, said Palestinian police told her the Italian had been released. Morgantini would not identify the man.
It was not immediately clear who carried out the kidnapping.
The abduction is the latest in a rash of kidnappings in Gaza since Israel's withdrawal from the coastal strip in September. On Friday, three Britons were released after being held by gunmen for two days.
Palestinian security officials said the Britons were abducted by gunmen with ties to Palestinian leader Mahmoud Abbas' ruling Fatah party. The kidnappers said they were members of a previously unknown group, the Mujahedeen Brigades Jerusalem Branch.
The group threatened more abductions of foreigners if Israel did not abolish a "no-go" zone it declared last week on its border with Gaza in the north. Israel put the area off-limits last week in an effort to prevent militants from firing rockets into Israel from there, and it threatened to shoot anyone entering the zone.
Late Saturday, two Palestinians were killed in an Israeli air strike on the zone.
The abductions are part of an increasing wave of lawlessness on Palestinian streets in recent months, with armed gangs storming government buildings and election offices and shooting at each other in the streets. Some Palestinian officials have urged postponement of the Palestinians' Jan. 25 parliamentary elections because of the growing chaos.
Militants have kidnapped foreigners as bargaining chips to get relatives released from Palestinian prisons, secure jobs from the Palestinian Authority or settle personal scores. The kidnappings have all been relatively brief, and all the hostages have been released unharmed.