Vito Roberto Palazzolo is accused of being a leading member of the Cosa Nostra Sicilian mafia. He was arrested in Thailand in March.
"The court ruled that Palazzolo should be extradited," an official at the Bangkok Criminal Court told AFP. "The judge ruled his case was not political as it's organised crime and money laundering," she said.
Under Thai law, Palazzolo is entitled to file an appeal within 30 days.
He was sentenced in absentia by an Italian court in 2009 to nine years in jail for association with the mafia, and had been living in South Africa under the name Robert von Palace Kolbatschenko before travelling to Thailand.
In South Africa -- which declined to extradite him -- Palazzolo was seen as a major businessman with interests in mineral water, security and ostrich farming.