Fano is located on Italy's eastern Adriatic coast, just under 300 kilometres north of Rome.
The bomb was found Tuesday during hydraulic works on the city's seafront, and prompted the local town hall to clear everybody within a 1.8 kilometre radius.
On Wednesday, the town hall said the bomb was neutralized in "a special and highly risky operation" by army and navy experts, who lifted it and dropped it in the sea.
Mayor Massimo Seri announced that Fano was "out of danger and fully safe," as he revoked evacuation orders and allowed local shops, public offices and the hospital to reopen.
The local train station, port and airport were also back in service.
According to the SkyTG24 news channel, the 225-kilogram TNT bomb had a delayed fuse that was accidentally set off, and could have exploded within 144 hours of its discovery.