Vittorio Arrigoni was abducted on Thursday. Members of the Tawhid and Jihad, a known Salafist group, posted a video online saying they would kill him unless the rival Hamas, the Islamist militant group that controls Gaza, would release Salafists that are in prison in Gaza.
Within a few hours of the warning, security officials in Gaza say they found Arrigoni's body in an empty house.
They say he had been hanged or strangled.
A video posted online showed his face bloodied and his eyes blindfolded with tape.
Gaza journalist Mohamed Dawas, reporting for VOA, says Hamas condemned the killing and made arrests.
"They described it to be a terrible crime that is against our religion, against our morals," said Dawas. "This crime, they said, does not reflect the reality of what's on the ground in Gaza [regarding] security and order."
Hamas has been battling the Salafists in Gaza for months. The Salafists accuse Hamas, which the U.S. considers a terrorist organization, of being too moderate for failing to impose strict Islamic law and not using more force against Israel.
Beverley Milton-Edwards is a specialist in Palestinian Islamist groups at Queens University Belfast. She says the Salafist groups present the biggest domestic threat to Hamas.
"They have engaged in such kidnapping attacks on foreigners," said Milton-Edwards. "What they want the Hamas government to do is to become a very fundamentalist form of government, and that means that the Hamas government should become more like al-Qaida and should have nothing to in terms of temporal matters such as cease-fires with a group or a nation that's regarded as an enemy such as Israel and the Jewish people."
Salafists have been accused of attacking Internet cafes and calling for the expulsion of Christians.
Gaza residents say activist Vittorio Arrigoni arrived there years ago aboard a vessel that made it past the Israeli blockade and had worked to further the cause of the people of Gaza.
In the text of one of the videos they posted, his captors said he had entered their land to spread corruption, and described Italy as an infidel state.
The Tawhid and Jihad group later denied posting the video or any involvement in the killing of Arrigoni.