The Chelsea defender believes that, with Andrea Pirlo, Antonio Candreva and Mario Balotelli within their ranks, the Azzurri have to be considered genuine title contenders
The Azzurri came through their European qualification group unbeaten and the Chelsea defender says that Cesare Prandelli has a squad capable of equalling the Selecao's record of five tournament triumphs.
"He has a fantastic team, which plays good football," Luiz said. "They have the right mindset to tackle the big tournaments because they can count on players who know and live with the pressures that come with remarkable technique. When you play Italy, you are never the favourites.
"Italy do not have four stars on their shirts by chance. Lifting the World Cup four times must be respected. They are going to be a great opponent.
"A Brazil-Italy final? Why not? Just as long as it finishes as it did in 1994! Seriously, Italy can get to the final, maybe even win the final."
Luiz identified playmaker Andrea Pirlo, midfielder Antonio Candreva and striker Mario Balotelli as Italy's main threats.
"Pirlo is an artist with his feet and Candreva impressed me so much at the Confederations Cup," the centre-back revealed. "I did not know him that well but he has shown he has great quality.
"And Balotelli, he is a special guy with a great talent. With the ball at his feet can do anything because he is very strong both technically and physically.
"He can make the difference. I learned that on those occasions when I played against Italy or Manchester City."