The department says it hasn't set an asking price for the opulent, 1,467-square-meter property, known as Villa Grandi, which Canada acquired in 1950 before extensive renovations in the early 1980s.
Foreign Affairs says it is intent on ensuring that taxpayers get value for money when it comes to diplomacy.
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Last fall, the department sold a historic London mansion that houses part of the Canadian High Commission for $530 million.
A number of other properties are thought likely to land on the market soon, including the posh New York apartments which house Canada's ambassador to the UN and the consul general.
"Under the strategy, high cost, oversized and/or poorly located housing is being replaced by more appropriately sized and located properties," Foreign Affairs spokesman John Babcock said in a statement.
"The replacement of diplomatic properties abroad in no way affects either the status or the importance Canada attaches to its relationship with the host country."
Set in a two-hectare park, Villa Grandi comprises a main four-level villa and a two-floor caretaker's cottage. The listing describes a large dining room, several reception rooms, a study and a service kitchen.
The grounds feature centuries-old trees and orchards, as well as a tennis court, fountains, a small shed and a parking area.