The AB 412 helicopter crashed overnight about 13km southeast of Nasiriya, the southern Iraqi city where Italy's 3000 troops are based, the military said in a statement on Tuesday.
The cause was not immediately clear.
The deaths bring the number of Italian troops killed in the country to 24, according to the Defence Ministry. Most of those casualties came in a November 2003 bombing of Carabinieri headquarters in Nasiriya.
The helicopter was returning from the Kuwaiti international airport and had stopped to refuel at Camp Buehring, also in Kuwait. Radio contact was lost soon after take off from the camp, the statement said.
A rescue team found the wreckage at dawn in the desert, close to the Tallill air base in Iraq near Nasiriya.
The military said it was investigating the cause of the crash.
"We have started examining the wreckage," Lieutenant-Colonel Fabio Mattiassi, a spokesman for the contingent, told Italian TV Sky TG24. He said it was too early to say whether the crash was an accident or the result of an attack.
"For the time being, there are no hypotheses," he said.
The Italian military statement identified the victims as Lieutenant-Colonel Giuseppe Lima, 39 and Corporal Marco Briganti, 33, the two pilots; Sergeant Massimiliano Biondini, 33; and Sergeant Marco Cirillo, 29, the two machine gunners.
Prime Minister Silvio Berlusconi has been a staunch ally of US President George Bush in Iraq. He sent in the troops - one of the largest contingents in the US-led coalition - after the ouster of Saddam Hussein to help rebuild the country.
Last Thursday, an OH-58 surveillance helicopter was shot down by small arms fire near the town of Baquba, northeast of Baghdad, killing two American soldiers on board.