Italy expelled two Russian officials on Wednesday after an Italian Navy captain was charged with selling secret documents.
The frigate captain was arrested on spying charges after a "clandestine meeting" with a Russian military officer late on Tuesday in Rome, police said.
Special operations police stopped both men but only the Italian was arrested. He was accused of passing on confidential documents in exchange for money.
The Russian, an embassy official, avoided custody due to diplomatic immunity, police said.
Italian Foreign Minister Luigi Di Maio summoned Russia's ambassador to Rome, Sergey Razov, on Wednesday to lodge a formal protest.
The diplomat was notified of "the immediate expulsion of the two Russian officials involved in this very serious affair", Mr Di Maio said.
The Navy captain worked at the office of Chief of the Defence Staff and had access "to a wide range of documents" concerning both Italian defence and NATO activities, la Repubblica newspaper reported.
The Corriere della Sera newspaper said the captain was paid €5,000 ($5,860) in cash by the Russian.
In London, Britain's Foreign Secretary Dominic Raab spoke of his solidarity with Italy and condemned "Russia's malign and destabilising activity that is designed to undermine our NATO ally".
Police said the captain was apprehended after a long investigation led by Italy's domestic intelligence agency Aisi, with support from the Chief of the Defence Staff.
La Repubblica said it was the "most serious" incident with Russia since the end of the Cold War, recalling a 1989 incident when Russian and Bulgarian spies were discovered in Italy.
Moscow is embroiled in a series of rows with the West, most recently over the jailing of Kremlin critic Alexei Navalny, a move that triggered EU sanctions against senior Russian officials.
But Italy is one of the countries within the European Union and NATO with the warmest relations with Russia. Former prime minister Silvio Berlusconi is a friend of Russian President Vladimir Putin.
The Russian embassy in Rome confirmed that a member of the office of the military attache was stopped by police on Tuesday, but said it was "inappropriate to comment" in detail.
"In any case, we hope that what happened will not affect the bilateral relationship between Russia and Italy," the embassy said.
In a later statement, it expressed regret for the expulsion of two members of its military attache office, but made no mention of possible retaliatory moves.
"We don't have information about the reasons for or the circumstances of this detention," Kremlin spokesman Dmitry Peskov said.
"But in any case, we hope that the very positive and constructive nature of Russian-Italian relations will continue and will be preserved."
Bulgaria, an EU and NATO member like Italy, expelled two Russian diplomats last week after six people were arrested, including several defence ministry officials, on suspicion of spying for Russia.
Also last week, the Kremlin issued a statement in which Mr Putin bemoaned "the unsatisfactory state of Russia-EU ties", which he blamed on the "unconstructive, often confrontational policies of our partners".
This month, relations between Moscow and Washington sank to a new low after US President Joe Biden called the Russian president a "killer", leading Mr Putin to say: "It takes one to know one."