Saddam Hussein's Iraq launched the invasion of Kuwait in early August 1990, which was completed in a matter of hours. The UN Security Council passed a resolution condemning the invasion, followed by Italy, which held the Presidency of the EEC at the time. It was at this meeting that the trade embargo against Baghdad was decided, while Prime Minister Andreotti, speaking by telephone with Bush, indicated the need for Security Council intervention, making the Sigonella base available for the operation for the transfer of materials and troops to the Gulf area, and later deciding to send an Italian naval squadron as well. Following this, Saddam decided to hold the approximately 10,000 Western citizens present in Iraq, including many Italians, hostage. The Italian government, like most Western governments, refused to compromise. Only in December did Saddam decide to release them unconditionally.

Andreotti's cautious stance on the issue was driven by the numerous peace demonstrations held in Italy and Cossiga's references to the Constitution. He hoped for peaceful mediation from the USSR, but on November 28, the Security Council issued an ultimatum, setting January 15 as the deadline for Iraqi forces to evacuate Kuwait. Italy would not be obligated to resort to force, but was required, according to the resolution, to "provide adequate support." Andreotti, however, attempted to defuse tensions in October by writing a letter directly to Saddam, seeking to avoid war and relying on UN mediation, but the attempt was unsuccessful. The final attempts at mediation, launched by European leaders and Pope John Paul II, came to nothing, and on the night between January 16 and 17, 1991, military operations began. Peace movements then mobilised, along with protests from Occhetto and even Craxi, prompting Andreotti to adopt a cautious stance.

The Prime Minister welcomed Gorbachev's mediation proposal, which arrived in mid-February, but the United States rejected it and launched ground operations, quickly routing Iraqi forces and liberating Kuwait. The experience did not benefit Andreotti, who displeased both the United States, for having supported Moscow's mediation attempts and provided scant assistance to the cause, and the Holy See and pacifist public opinion.