"I don't know whether to laugh or cry. We've waited so long for this medal, thank God it's a gold," said Croatia's Maro Jokovic.
The Croatians, who were unbeaten in the tournament, celebrated in style with their coaches jumping fully clothed into the pool and sitting on the floating goal until it collapsed as they clapped and cheered supporters in the crowd.
"What an amazing feeling. I can't explain this. This is the top of the top," said captain Samir Barac, 38, who will retire from the sport after winning gold in his fourth Games.
Croatia's victory marks the end of the Hungarian dominance of the sport after a run of three successive Olympic titles.
The bronze medal went to Serbia for the second time in a row after they beat Montenegro earlier in a 12-11 thriller.
The Serbians turned around a three goal deficit and scored in the last minute to take third place in a tournament where the Balkan-based countries showed their mettle.
The Croatians ran away with the final in the second half, shutting down an Italian team who were not the slick machine they had been in the semis, and who struggled to find a way past the tournament's top-ranked goalkeeper in Croatia's Josip Pavic.
"We fell into their provocations. They were trying to play a physical match. We decided to play along with them and it just didn't work out," reflected Italy's Pietro Figlioli.
The Croatians, like the other teams from the former Yugoslavia, Serbia and Montenegro, are renowned for their physical and aggressive style of playing.
"It only takes one game to lose the gold and that was the one unfortunately," Figlioli said.
The Italians, reigning world champions, had a tough route to the finals, having to overcome tournament favourites Serbia in the semis and Hungary in the quarters.
"We spent all our energy for Hungary and for Serbia and in the final, maybe, we were a little bit tired and they have easier rounds and maybe in the final they arrive less tired than us," Italy's Valentino Gallo said.
"They are strong in every part of the game. They are the best team for sure."
Both teams featured on the podium for the first time since 1996, when Croatia won silver and Italy took home bronze.
The gold-medal game was trumped by the bronze match for drama and excitement. A repeat of the outcome of the third-place game in Beijing, it was an intense physical clash in which emotions ran high.
"This bronze medal is more shiny for us than if we had got into the final and lost against an opponent," Serbia's Filip Filipovic said.
The Italians, chasing a gold in the sport which has eluded them for twenty years since their victory in 1992, said they would be back to fight the Balkan dominance in Brazil in 2016.
"I dreamed of gold, but we're a young team, only training together for three years so we will come back again in Rio," Maurizio Felugo said.