Gabriele D'Annunzio, a highly decorated hero and now a legendary figure among veterans, became the voice of the most uncompromising military faction after the war, unsatisfied with the outcome of the Treaty of Saint Germain which he criticized as a "mutilated victory" in the columns of Corriere della Sera, coining the term already by the end of 1918. In September 1919, D'Annunzio led a group of "legionaries" who gathered in Ronchi and were soon joined by regular troops to conquer the city of Fiume, previously part of the Austro-Hungarian Empire, which had been unsuccessfully claimed by the Italian delegation in the Paris negotiations. On September 12, the expedition entered Fiume and proclaimed its annexation to the Kingdom of Italy, despite the hostility of the government in Rome.

On August 12, 1920, D'Annunzio decided to establish the territory of Fiume as an independent state, proclaiming it the Italian Regency of Carnaro. Among the first acts was the promulgation of the Charter of Carnaro, a constitution with libertarian and socialist features penned by the revolutionary syndicalist Alceste De Ambris. The Free State of Carnaro was the first to recognize the Soviet Socialist Federative Republic of Russia.

After signing the Treaty of Rapallo on November 12, 1920, defining Fiume as a free city, Italian troops entered Fiume at Christmas and D'Annunzio had to surrender. The occupants of Fiume, known as "Legionaries" or Arditi, although mostly former regular members of the Royal Italian Army, wore black shirts and black fezzes, a uniform later adopted by Benito Mussolini's paramilitary forces, initially known as Blackshirts and later as National Security Volunteer Militia.