Italy chose the Eurofighter Typhoon as its next generation air-defense fighter. However, because of delays in the Eurofighter Typhoon program, the Italian government decided to lease a batch of ex-USAF F-16A/B aircraft to serve on an interim basis with the Aeronautica Militare Italiana for five years. The program is known as Peace Caesar. They will operate in the air-to-air role and will replace leased RAF Tornado F.3s (which are due to be returned to the UK) and the F-104S Starfighter (which was due to be retired from service in 2004). An option for an additional 5 years of service was agreed upon, and an additional four non-flyable F-16s were to be acquired for spares support. The Italian AF F-16A/Bs were to serve until the Eurofighter Typhoon is fully combat-capable, which was expected by the year 2010.
The AMI F-16s were supplied from stocks that were in storage at AMARC, and considerable refurbishment work was undertaken at Hill AFB in order to extend the airframe life. An upgraded F100-PW-220E engine was installed. The Italian Air Force formally accepted its first F-16A in the USA in May of 2003. The first batch of the ex-USAF F-16A/B Block 15 ADF aircraft (2 As and 3 Bs) arrived in Italy on July 17. They joined 37o Stormo. 12 more were delivered by the end of 2003, with the with all 34 operational by the end of 2004 with 27o Stormo (10o and 18o Gruppo) at Trapani/Birgi and with 18o Stormo (23o Gruppo) at Cervia/San Giorgio. Logistical and training support was provided by the 162nd Fighter Wing of the Arizona Air National Guard, based at Tucson IAP, Arizona.
In 2010, the Eurofighter Typhoon finally began to enter service with the Italian Air Force. In June of 2010, the Italian Air Force started to return their leased F-16s to the USA, with the last example being returned on May 23, 2012.