The Azzurri, who never quite reached the standard of performance set in their previous games against England and Germany, were put on the back-foot within the first 15 minutes of the game when Barcelona midfielder Cesc Fabregas got in behind the Italian defence and pulled back to David Silva to head home from six yards out.
Things got even worse for Italy just before half-time when a defence splitting pass from Xavi found Jordi Alba's run, and he calmly slotted past Gianluigi Buffon for Spain's second of the game.
Late goals from Chelsea duo Fernando Torres and Juan Mata confirmed a rampant Spanish victory, and Prandelli believes that fatigue was a factor in his teams poor performance.
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"We were not in the good condition, we had some players not fit and against Spain you have to be at your best to win" he told reporters.
"We were tired, we didn't play our football,"
Prandelli admitted that he thought winning the championship would have been a bridge too far, but insists he is already focusing about the future.
"I think this team did the best they could" he added.
"At the end of the match I said thanks to everyone for what they did in this tournament. Now we look to the future."