England's troubles began in the 38th minute when Casey Stoney was ejected.
The English took the lead on Fara Williams' penalty kick but the Azzurre rallied to win on goals by Patrizia Panico and Alessia Tuttino from 25 yards.
Alex Scott, Karen Carney and Eniola Aluko all started for England while the ailing Kelly Smith came off the bench.
WPS players Camille Abily and Sonia Bompastor had better luck, both converting penalty kicks in France's 3-1 win over Iceland.
St. Louis Athletica defender Sara Larsson was in the starting lineup for Sweden in its 3-0 win over Russia.
Host Finland opened with a 1-0 win over Denmark before 16,324 fans at the Olympic Stadium, a record for a women's international in Finland.
Former Notre Dame star Anne Makinen started and former Florida State striker Sanna Talonen came on as a substitute.
Another former Seminole, Kirsten van de Ven, scored for the Netherlands in a 2-0 win over Ukraine.
Netherlands 2 (Van de Ven 4, Stevens 9) Ukraine 0.
Finland 1 (Saari 49) Denmark 0
Germany 4 (Bresonik pen. 33, Bajramaj 90, 90+ 4, Mittag 90+ 2) Norway 0.
France 3 (Abily pen. 18, Bompastor pen. 53, Necib 67) Iceland 1 (Magnusdottir 6).
Italy 2 (Panico 56, Tuttino 82) England 1 (Williams 38 pen.)
Sweden 3 (Rohlin 5, Sandell Svensson 15, Seger 82) Russia 0.