Several points to be addressed in this response. Here we go.

Was Mussolini aware of the genocide? The Shoha was both in the Nazi plans and unforeseen. In the sense that the Nazis wanted a Jew-free Europe at any cost, but the actual plan of extermination by means of camps equipped with gas chambers was born with the Wansee Conference in 1942. Before that there were impromptu attempts at large-scale massacres, such as massacres on the Eastern Front or plans to deport and let Jews starve to death in Madagascar. So Mussolini in 1940 could not have been aware of the Shoah. But still he was aware of the Nazi hatred of Jews and the discrimination that was already beginning to take place in occupied Europe.

Was Mussolini anti-Semitic? Question still debated today. Some sources cite his anti-Semitic articles (Mussolini was a journalist) before his rise to power and memoirs by family members report insults against Jews, but in any case the need to have the support of Italian Jews during his rise to power silenced this part of him, if any. The fact remains that the Italian racial laws of 1938, second only to Germany in harshness, arose from the sole will of Mussolini, to the dismay of both the Church and the Monarchy and without demonstrated German pressure to do so. And as the war continued, Fascist rhetoric became increasingly anti-Semitic, until it was indistinguishable from Nazi rhetoric by the time of the collaborationist republic of Salò.

Why did Mussolini enter the war? Because, and this as an Italian with grandparents who were war veterans really hurts, "Mussolini wanted war. Any war," in the words of Renzo de Felice, Italy's leading historian of fascism. To read the accounts of the months before Italy entered the war in June 1940 (I recommend Alfassio Grimaldi & Bozzetti "Dieci giugno 1940. Il giorno della follia" Laterza 1974) it is disheartening to see how everyone, including the Duce, was aware that Italy was not ready for a European, let alone a world, conflict. Yet despite everyone flailing to remind Mussolini of the state of affairs, the dictator continually swayed between realism and a deep desire to commit his country to war for the simple reason that in his view a great country cannot remain neutral, especially after the regime had spent its existence extolling war, the struggle against plutocracy and the "beautiful death." The unexpected and sudden fall of France after only one month of German operations is the decisive push toward entry into the war. Mussolini fears that the war will end without him being able to take part in it and decides to enter it before, in his opinion, the inevitable German victory. I don't know how well known abroad, but there is an infamous quote from Mussolini that indicates the levity and ruthlessness with which the dictator entered the war: "I only need to have a few thousand dead to sit at the peace table next to the victors."