This article deals with housing illegality/informality in Italy, where it represents an established aspect of urban development. It presents a case study focused on Desio, a town close to Milan in northern Italy. Here housing illegality occurs by virtue of the well‐established presence of a mafia‐type criminal organization (the ‘Ndrangheta). Three examples of illegal construction in Desio are analysed, forming the basis for a discussion on the distinctive features of illegal house‐building in Italy. In particular, institutional incentives encouraging illegal housing are investigated, with reference to both formal institutions (e.g. planning laws, rules preventing unauthorized housing and building amnesties) and informal institutions (e.g. organized crime). The case of illegal housing in Italy contributes significantly to the wider international debate on urban informality, highlighting the critical need for research along avenues as yet only partially explored (e.g. informal housing in Western countries and the role of criminal activities and actors in the spread of informality) and challenging some common assumptions such as the geographical dualism (‘global North’ versus ‘global South’) which, implicitly, results from the international literature.