Two early attempts through Jane Ross, saw Italian keeper Arianna Criscione forced into making a save and then seeing Ross lob the ball over the keeper but it was too strong and it went over the bar, after a superb pass from Emma Fernon.
Those two chances for Scotland sandwiched a Melania Gabbiadini chance for Italy with Gemma Fay forced into making a save.
On 19 minutes Arsenal’s Jennifer Beattie should have given Scotland the lead as she dispossessed Roberta D’Adda leaving her one-on-one with Criscione, but the keeper made a good save and from the resulting rebound Beattie fired past the post.
Italy came close twice through captain Patrizia Penzo, but Scotland held firm.
Scotland again could have opened the scoring when Jane Ross and Hayley Lauder linked up well to tee Kim Little up, the midfielder fired a great shot towards goal but Criscione pulled off a superb save to tip the ball over the bar for a corner.
With half time approaching Italy opened the scoring in the 43rd minute, full back Alia Guangi ran into the box and stroked the ball past keeper Gemma Fay.
Into the second half and once again the Italians were dominating the early exchanges, but Scotland pulled a goal back to level the scores. Jennifer Beattie and Jane Ross linked up well to secure a corner for the Scots. Kim Little took the resulting set piece and with the Italians failing to clear their lines, substitute Leanne Ross beat Criscione with a superb strike from the edge of the box.
Scotland remained on level terms for all of two minutes as Gabbiadini latched onto a high ball into the Scotland box and fired past Fay.
In the final stages of the game Scotland chased a second equaliser, but it wasn’t to be as the Italians held firm to take the win.
After the match Scotland coach Anna Signeul said: “We played another good first half and should have been leading at half time, but then we collapsed a bit. Italy are very experienced and they took the right decisions whereas today our decision-making let us down at times.”
There was more disappointment for Scotland as central defender Ifeoma Dieke was ruled out of Tuesday’s final match of the tournament having been taken to hospital for an x-ray on her injured ankle.
Scotland (4-4-2): Fay; Small, Jones, Dieke (Brown 59), Fernon; Love, Little, Sneddon (L Ross 57), Lauder (Evans 52); Beattie (Grant 70), J Ross (Mitchell 87).