The first operational squadron of the Italian air force, the 103° Gruppo of 51° Stormo formed in November 1989, with the first Italian unit also forming in 1989. Both the Italian and Brazilian AMX fleets were grounded in February 1992, following the crash of an Italian AMX due to engine failure. Operations were allowed to restart in May that year, following modification of the engines.
Italy assigned six AMXs from 103° Gruppo to operations over Bosnia in 1995 as part of Operation Deny Flight, which was followed by a similar deployment in support of the IFOR peacekeepers in Bosnia. This deployment was interrupted by another grounding, again due to engine failure, between January and March 1996. Italian AMX aircraft were used in 1999 in the Kosovo war. Instead of using unguided or more traditional laser-guided bombs, the Italian Air Force used dozens of Mk 82 bombs fitted with Opher Israeli guidance kits, effectively converting the "dumb" bombs into an infrared-guided bomb.
In the late 1990s, AMX International was considering a major engine refit, a non-afterburning variant of the Eurojet EJ200 was proposed, having considerably more thrust than the existing powerplant. In 2005, the Italian Air Force launched an upgrade programme (ACOL Aggionamento Capacità Operative e Logistiche – Operational and Logistical Capability Upgrade) for 55 of its AMXs, adding a new laser INS, new cockpit displays and allowing the aircraft to drop Joint Direct Attack Munition guided bombs. In August 2007, Embraer began a major midlife upgrade programme and modernisation of 53 Brazilian Air Force AMX A-1s, focusing on avionics systems and new armament additions; the programme is estimated to have extended the lifespan of the fleet beyond 2027.
Starting in November 2009, four Italian AMX were deployed overseas for operations in Afghanistan, replacing the same number of Italian Tornado IDS in the recce role. Of particular note is the aircraft's ability to share digital electro-optical and infrared sensor information with ground troops in real time, providing valuable reconnaissance information and helping to minimise threat exposure; by the end of 2010 over 700 combat missions had been flown in the Afghan theatre. On the 28 May 2014, the AMX performed its last combat sortie in the Afghan theatre. On 20 June 2014, all remaining AMXs were withdrawn from Afghanistan.
In 2011, Italian AMX aircraft were employed during the 2011 military intervention in Libya. Italian military aircraft deployed 710 guided bombs and missiles during sorties: Italian Air Force Tornados and AMX fighter bombers deployed 550 bombs and missiles, while Navy AV-8Bs deployed 160 guided bombs. AMX aircraft for the first time used Litening III targeting pods paired with Paveway and JDAM guided bombs.
As of March 2012, the Philippines was in negotiations with Italy for the possible procurement of used AMX aircraft, although no official information has been released. Jane's also reported that the AMX is being considered for the PAF's Lead-in Fighter Trainer (LIFT)/Surface Attack Aircraft (SAA) project.