ChatGPT has an "absence of any legal basis that justifies the massive collection and storage of personal data" to "train" the chatbot, Garante said.
OpenAI has 20 days to respond with remedies or could risk a fine of up to 4% of its annual worldwide turnover.
ChatGPT was still answering questions posted by Italian users on the platform on Friday evening.
Italy, which provisionally restricted ChatGPT's use of domestic users' personal data, became the first Western country to take action against a chatbot powered by artificial intelligence.
The European Commission, which is debating the EU AI Act, may not be inclined to ban AI, European Commission Executive Vice President Margrethe Vestager tweeted.