Benjamin Raich led an Austrian 1-2-3 in the men's slalom on Saturday, but Briton Alain Baxter could finish only 16th.
Raich triumphed in Sestriere to complete a golden double at the Games - he had earlier won the giant slalom event.
Team-mate Reinfried Herbst was second and another Austrian, Rainer Schoenfelder, third.
Raich said: "I am just very happy because it is unbelievable for me to win two medals here. I was focused on the second run, and this is a perfect moment for the Austrian team."
His double more than made up for his agony in Salt Lake City four years ago when he had to settle for two bronze medals and a fourth place.
It was no surprise that Baxter failed to repeat his stunning third place of four years ago which saw him win a bronze medal that was later taken away after a positive drugs test.
The 32-year-old from Aviemore returned to form with two solid runs in freezing temperatures on a difficult course which saw 37 competitors including Italian favourite Giorgio Rocca fail to finish.
Baxter said: "I think I started off pretty strong and finished quite strong but I was a bit too passive in the middle and that cost me a place in the top 15.
"Maybe I wasn't quite going at 100 per cent and I am a little bit disappointed. But I think I am skiing quite well and I am looking forward to the future."
Baxter's half-brother Noel finished four places further back in 20th position, 4.08 seconds off winner Raich.
Rocca's dream of a home triumph had been wrecked in a dramatic first run which saw the crowd favourite crash out.
The pre-race favourite, who won the first five slalom races of the current World Cup season, slipped and fell midway through.
It was a nightmare end to the Games for Rocca and his legion of fans who had hoped to see their man emulate the great Alberto Tomba and sail to victory.
Rocca said: "I lost a great opportunity that can come back only in the next Olympics. I was skiing very well and felt good before the race. It is a pity and I am sorry."
American Bode Miller and combined champion Ted Ligety also failed to finsh the first run - both straddled gates.
A third Briton, James Leuzinger, did not complete either.