Julius Caesar (49-44 B.C.) planned the reorganization of Italy, but he did not live to put it into execution. After twenty years of civil war and anarchy, his legal heir Octavian, later called Augustus (27 B.C. - 14 A.D.) came to the task of re-establishing public order in the Empire, in Italy, and in Rome. In 27 B.C. he 'restored the republic to the Roman people', exchanging his dictatorial for equal but more constitutional authority, and continued as princeps, to watch over the working of the reformed Senate and republican magistrates, and of a growing civil service directly responsible to himself.

Italy was still administered by the Senate, in eleven 'regions' which included Cisalpine Gaul and extended from the Appenines to the new frontier provinces, Rhaetia, Noricum, and Pannonia, between the Alps and the Danube. New citizen colonies were founded, and the whole country divided up into self-governing communities, coloniae or municipia. Rome itself was much rebuilt and became a capital city worthy of the now vast Roman Empire, housing a population which grew greatly at least until the second century A.D., when it perhaps amounted to a million souls, 150, 000 of whom were sustained by a dole of free corn. The rest were the personnel of the central administrative offices of the empire and the army, and also the retainers of the great princely families, which supplied the army with its officers and the administration with its governors (proconsuls and legates). A large percentage of the city population were of foreign and servile origin, and particularly included oriental elements which brought with them many mystical religions, such as Mithraism and Christianity.

Italy, like Rome, had shared in the decline of the republic. Together with political independence, exclusive privileges and responsibilities were vanishing. The overwhelming power of the emperor, and its abuse by individual rulers, bore most hardly on regions nearest the seat of government. The autocracy, expressed by the bestowal of divine honours on the emperor, was practised in many indirect forms, though technically forbidden in Italy. The municipal system was, however, consolidated, and extended into the provinces, especially in the west.