Central to the arrangements are M-340 aircraft trainers from Alenia Aermacchi.
Alenia said Israel has agreed to buy 30 of the aircraft as well as engines, maintenance, logistics, simulators and training services.
The M-346, which can be reconfigured for combat missions, was designed using design-to-cost and design-to-maintain concepts, with an avionics system modeled on those used in new-generation fighter aircraft, such as Eurofighter, Gripen, Rafale, F-22 and the F-35.
It is based on the Yak-130, which was designed by Yakovlev and Alenia Aermacchi as a joint venture. The plane is capable of transonic flight without the use of an afterburner.
Its length is about 37.7 feet and its wingspan is 31.8 feet. Maximum speed is 572 knots and it has a ceiling of 45,000 feet.
The new aircraft will replace the A-4 Skyhawks the Israeli air force operates for training.
Under the agreement, the first M-346 is to be delivered in mid-2014.
"The signature of the contract with Israel for the supply of 30 M-346 -- including an advanced training system -- is the result of the technological and productive excellence of the Italian industry, the highly regarded collaboration between the two countries and the synergies with the Italian Defense Ministry," said Giuseppe Giordo, Alenia Aermacchi chief executive officer, who is responsible for the Aeronautics sector of parent company Finmeccanica.
"This achievement is an outstanding success for Italy, both at institutional and industrial level. The women and the men of Alenia Aermacchi, our partners, the small and medium enterprises that participate in the program must be honored to be part of this great accomplishment."
The Italian air force signed an agreement procuring M-346s in 2009 and the air force of Singapore did the same in 2010.
The contract with Singapore, which includes participation by ST Aerospace and Boeing, is for 12 aircraft and ground-based training systems. Contracts with Singapore have also been finalized with ST Aerospace for logistics support.
The first aircraft are scheduled for delivery to Singapore this year.
Italy, in its dealings with Israel, has also agreed to a deal to acquire from Israeli Aerospace Industries two Gulfstream G550 aircraft configured for early warning missions.
The aircraft are equipped with four-panel bi-spectral AESA radar, IFF and passive electronic support measures and a NATO-compatible communications system developed by Elta and SELEX-Elsag.
The Israeli publication Defense Update said that, in a parallel deal, the Italian company Telespazio has signed IAI as a main subcontractor to provide a reconnaissance satellite that will be operated for the Italian Ministry of Defense.
Details of the satellite deal are scant, but the publication said the satellite to be built for Telespazio is believed to base an OPSAT 3000 observation satellite, which will feature the Jupiter multi-spectral imaging payload from Elbit Systems for high-resolution imagery.