The Euro is the official currency in Italy. Notes are in denominations of 5, 10, 20, 50, 100, 200, 500. Coins are in denominations of 1, 2, 5, 10, 20, 50.
The best place to exchange money is through an ATM machine in Italy. Be sure to bring your pin number with you. You should also advise your bank or credit card company so that they don't freeze your account due to abnormal charges.
Cirrus and PLUS are widely accepted ATM cards. Before departure, check with your bank about using your ATM card in Italy and about any fees that might be assessed. Traveler's checks are extremely difficult to exchange. Most banks in Italy will not provide a cash service for travelers checks in any currency due to the high number of forged travelers checks being circulated.
It is a wise idea to purchase at least 200 Euro prior to leaving the U.S.