The national competition authority, AGCM, found Apple's claims did not hold up under real-world conditions.
Instead, the water resistance claims were valid only with pure water in laboratory conditions.
AGCM also said Apple not covering water damage under warranty, despite claims of water resistance, was an "aggressive" practice.
The advertising at issue promised iPhones were water resistant at a depth of up to 4m (13ft) for 30 minutes.
The claim was made for a range of phones across several years, from the iPhone 8 to the iPhone 11 and their variations.
And it was not made clear this was true under tightly controlled conditions only, the authority found.
It ruled the advertising - which showed iPhones coming into contact with water - was misleading.
Apple has always advised against swimming or bathing with the iPhone, in its small print, which also says liquid damage is not covered by its warranty.
But the Italian authority also ruled the lack of warranty coverage for water damage broke articles 24 and 25 of the consumer code - on "aggressive commercial practices" and "coercion or undue influence".
AGCM objected to the fact the guarantee did not apply to something so heavily marketed as a feature.
But it also said the small print of Apple's manufacturer guarantee could not be used to circumvent its basic obligations when a product did not perform as advertised.
Apple was fined €5m for each of the two infractions.
It has not responded to a request for comment.