Where in Italy is Vatican City located?

Answer: Rome.

Some extra relevant information:

Vatican City, the smallest independent state in the world, is located within the city of Rome, Italy. Positioned on the west bank of the Tiber River, Vatican City is entirely surrounded by the boundaries of Rome, making it an enclave within the city. Despite its small size, Vatican City holds tremendous cultural, religious, and historical significance due to its status as the spiritual and administrative headquarters of the Roman Catholic Church. The iconic St. Peter’s Basilica, the Apostolic Palace, and numerous other revered landmarks can be found within the confines of Vatican City. Travelers visiting Rome often include Vatican City in their itineraries to explore its rich heritage, awe-inspiring art collections, and the opportunity to witness the splendor of the Vatican Museums and Sistine Chapel.

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