The case follows a lawsuit brought against Fallaci by Muslim activist Adel Smith over her book The Strength of Reason, according to prosecution lawyer Matteo Nicoli on Wednesday.
"Some of the things she said are offensive to Islam," Nicoli said, citing a phrase from the book that refers to Islam as "a pool ... that never purifies".
"Fallaci did her best to propagandise hatred against Islam and Muslims, distorting real historical facts and inventing others," Smith added in a written statement.
"She libeled, offended and defamed many times the Muslims all over the world."
Nicoli said no date had been set for the trial to begin in the northern town of Bergamo.
In her 278-page book, Fallaci wrote that Muslims "multiply like rats" and said "the children of Allah spend their time with their bottoms in the air, praying five times a day".
It also accuses the Roman Catholic Church of being too weak before the Muslim world, and Europe of selling itself to Islam "like a prostitute".
In 2002, her best-selling essay The Rage and The Pride also drew accusations that Fallaci was inciting hatred against Muslims.