As featured on the Everything2 Podcast, Season 2, episode 6.
Although the name suggests that Italo Disco was Italian, several other European countries had hits from this genre - such as Germany and Spain. (Some of Jean-Michel Jarre's work was vaguely Italo Disco, and he was, of course, French.) A lot of Italo Disco can still be seen today, such as in works from Kylie Minogue and Eiffel 65.
Early Italo Disco began emerging in the mid-to-late 1970s, as electronic synthesisers began to appear, so too did people who played with them, such as pioneer Giorgio Moroder, using Moog and Korg instruments. From there, Italo just grew. It had clearly peaked in the early-to-mid 1980s with labels like Discomagic Records and Il Discotto Productions, and from these, artists such as Jo Jo and Bo Boss. Cover versions of old songs were being done too, with Pink Project releasing a cover of Another Brick In The Wall, by Pink Floyd. (This has also been done by recent house music master Eric Prydz, under the title "Proper Education".)
1983, according to Italo Disco fans, was "the best year for Italo Disco music"1, with such hits as "Incantations" by G.A.N.G., "Young Man" by Nite Lite, "Run Away" by International Music System, various works by Amin Peck, and productions by the mysterious Den Harrow. As an aside, 1983 is the name of a recent house hit by Paolo Mojo, which is clearly a tribute to this year.
The LP considered to be the rarest ever is that of "Over And Over" by Fantasy Life, released in 1985. "The mp3 is quite easy to locate, but it's the original 12" record that fetches 600-700 dollars regularly on eBay."2 Around this time, Italo Disco took over the airwaves and there was a noticeable surge in the Italo Disco market, simply because it was very easy to make Italo Disco. Despite this, however, its popularity began waning in 1986, when house genres like Acid and Chicago began surfacing.
Since about 1993, however, there has been somewhat of a revival of Italo Disco. There are online radio stations that stream the genre, CDs being released of Italo Disco mixes, and underground clubs are playing the records widely. Newer releases in the Italo Disco genre have made use of the magical Vocorder, so they are quite easy to identify.
See also: http://en.wikipedia.org/wiki/Italo_disco
http://www.myspace.com/italodisco1
http://www.di.fm/edmguide/edmguide.html
In case you're wondering, Ishkur's Guide To Electronic Music has this to say about Italo disco:
"There was a big backlash to everything Disco in America in 1980. In Europe, this didn't happen, so disco naturally progressed over there to what it had been hinting at for several years: a stripped down, mechanical version of itself dubbed Italo Disco for reasons unknown as very few of the artists were actual Italians. But they all sang in english (sic), which is odd because english (sic) was universally a second language to them, as evidenced by the fact that the lyrics make no sense and the vocalists have thick accents of indeterminate origin. Still, despite these shortcomings, the music kicks ass, and is recognised as the world's first completely electronic commercial dance music, predating House, Techno, Electro, and just about everything else. The music is seriously stupid good fun once you get past its dated, tinny sound. I (Ishkur) now have ten times more of this music than any other genre. And I might very well start spinning it too. No, I'm serious. You don't believe me, do you?"