There was literal rejoicing in the streets of Italy when the decree removing Mussolini and the Fascists from power was read over the radio on 25 July.
"Attention. Attention. His Majesty the king and emperor has accepted the resignation from office by the head of government, prime minister, and secretary of state his excellency Sir Benito Mussolini, and he has named as head of government, prime minister, and secretary of state the Marshal of Italy, Sir Pietro Badoglio."
By the time the King reasserted his powers to remove Mussolini (and then have him arrested - a moment in which witnesses state Mussolini almost broke down in tears when he realized what was happening), the Fascists and the war was supremely unpopular in many areas of Italy. Remarkably there was little violence in the celebrations throughout Italy, as partisans chiefly just forcibly removed the Fascist symbol from those wearing it and made them toast to Badoglio.
Even with Mussolini booted out of power, Italy was still de facto allies of Germany - with King Victor Emmanuel III personally transmitting assurances to Hitler that Italy had no intention of leaving the Axis. New Prime Minister Badoglio let the people celebrate for a full day, before the country was placed under a strict lockdown and his government attempted to consolidate, legitimate it's power, and extract Italy from the mess created by the Fascists. It was assumed that no matter what happened, Italy would soon find herself under siege. The next 46 days, however, would prove disastrous for Italy. Badoglio was dithering, indecisive, and ultimately waited too long to dispatch intermediaries to broker peace terms. By the time the Armistice of Cassibile was worked out on 3 September 1943, Italy was doomed to be invaded by the Germans. Even more shocking, orders were not clearly issued to the army on what to do under the new circumstances, and Rome was left without defense. When the treaty was proclaimed on 8 September it was a minor blind side to the majority of the Italian army, and left them with only vague instructions on what to do:
"The Italian government, recognizing the impossibility of continuing the unequal struggle against an overwhelming enemy force, in order to avoid further and graver disasters for the Nation, sought an armistice from general Eisenhower, commander-in-chief of the Anglo-American Allied forces. The request was granted. Consequently, all acts of hostility against the Anglo-American force by Italian forces must cease everywhere. But they may react to eventual attacks from any other source." - Badoglio
The Germans would immediately launch a counter invasion to imminent Allied landings that would plunge Italy into a Civil War. The Germans quickly swept in occupying all the way down to Naples - where an insurrection of the people was the only thing that allowed the Allies to gain a toehold. With very short order they liberated Mussolini from jail, and created the puppet state of the Italian Social Republic (also known as the Salò Republic) which claimed the entirety of Italy, but in effect controlled no further south than Rome. The recognized Italian government (that headed by King Victor Emmanuel III and Prime Minister Pietro Badoglio) had fled south to Brindisi, where they declared war on Germany on 13 October 1943 with the left over units still loyal to the King coming under command of the Allies.
Hitler had been incensed at what he saw as "treason" by his Italian allies, and wanted the Italian people to be made an example of. Italian soldiers which had surrendered to the Germans were not treated well at all, being deported back to Germany for forced labor. Italian units that resisted were to undergo what Hitler decreed to be "exemplary punishment." Episodes like the massacre at Cephalonia of 5,000 Italian soldiers were carried out. The people were to bear the punishment of the Germans as well. A regular method employed by the Nazis was to arrive in an area, round up all military aged men, and shoot them. The bodies would then be burned. These methods were employed most devastatingly in areas which were viewed as being zones of partisan resistance. The work of the Germans under the Salò Republic brought a different level of suffering than strict massacres. Countless archives were destroyed in response to partisan resistance movements. Women were raped en masse by the Germans in the area they occupied. The Germans encouraged a malaria epidemic in Lazio, flooring the Pontine Marshes in 1943. The Salò regime was not one of collaboration as Vichy France was, it was without pause or equivocation an occupation. (The tactics used during the occupation remains a source of contention between Italy and Germany to this day as Italy consistently launches legal cases against the current German government for reparations onto its citizens.)
These episodes would continue as the Allies, with the legitimate Italian regime as full co-belligerents, fought their way up through the Italian peninsula. Partisan resisters were at times invaluable towards the allied effort in the liberation and in quelling any post-war form of resistance against the soldiers of the Salo Republic. The Salò Republic would be capitulated by the Germans on 2 May 1945, shortly before they themselves surrendered.
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