The article describes the recent evolution of the Italian third sector, focusing particularly on its changing role in relation to welfare policies and on its contribution to the development of the provision of social services. In contrast with those considering the emergence and development of the sector solely, or mainly, as a consequence of decisions made by external actors, especially public institutions, the article shows a more complex and dynamic picture. The article demonstrates that the Italian third sector, although at the present time largely engaged in contractual services with the public sector, has maintained a level of autonomy that allows for continuous innovation both within and external to the social service sector. The Italian case supports the need for further debate on the role of the third sector in modern society.