The Italians trailed for the majority of the final, but took the lead with three laps remaining and finished 4.5 seconds ahead of the heavily-favoured American team, nicknamed the 'Pain Train', celebrating it with basketball star Stephen Curry's famous 'good night' gesture.
The United States were the big favourites to win gold in Milan with the 'Pain Train', who hold the world record and the world championship.
The Netherlands were beaten out for the bronze medal by China, costing the dominant speed skating nation a team pursuit medal for the second Games running, finishing 0.09 seconds ahead after a big final push from the Dutch.
The Netherlands won medals in the first four editions of the team pursuit at the Olympics between 2006 and 2018, but are now without a medal since the 2018 Games in PyeongChang.
Italy, racing with Andrea Giovannini, Michele Malfatti and the great Davide Ghiotto, beat out four-time team pursuit medalists the Netherlands in the first semifinal on Tuesday, leading for the majority of the race and expanding the lead in the final laps to send the Netherlands, led by 40-year-old Jorrit Bergsma, to the final B.
The second semifinal saw the United States dominate China, finishing nearly eight seconds ahead of Liu Hanbin, Ning Zhongyan, and Wu Yu. Ethan Cepuran, Casey Dawson and Emery Lehman took the United States to its second Olympic team pursuit final.