Recognizing the social enterprises that have developed in Italy has been quite a long and complex process. It began with a law passed in on social cooperatives, which was progressively amended by a number of provisions that allow nonprofit organizations meeting certain criteria to engage in production activities. A general legal definition of social enterprises was introduced in a second law passed in 2005. This legislation was formally ratified when a third law was passed 2006. Understanding the relevance of social enterprises in Italy and the impact of the original law on their development requires a broad understanding of the evolution of this phenomenon. This understanding can be facilitated by a general description of the political and economic background and the historical development of these productive nonprofit organizations. The authors describe the main content of the new legislation, allowing a comparison of the legal definition of characteristics of nonprofit organizations with the features of existing social enterprises. To uncover the potential of Italian social enterprises, they describe the evolution of the NPO using recent data and examples of new trends.