The study discusses the impact of E. Coseriu (1921-2002), a prominent 20th century linguist, an expert in language theory and philosophy, on the development of language restandardization theory in modern Italy. E. Coseriu proposed a model of living language that accounts for its basic property - variability, which allows to solve the so-called paradox of language change widely discussed in post-saussurean linguistics and to produce a complex description of language system, norm, and speech in their mutual correlation. The analysis presented in the paper shows how the system of language variation parameters (diachrony, diatopy, diastraty, and diaphasy) constituted the theoretical basis for describing the process of restandardization typical of Modern Italian since the last decades of the 20th century. Modern Italian, also known as Italiano neo-standard, fulfils all the communicative functions, is used both in speech and in writing in all speech genres and registers, and is L1 for more than a half of Italy’s population. This language situation, however, is relatively new: up to mid-20th century the majority of Italians were bilingual, and the dialects of Italy functioned as their L1 and as means of informal communication. The widening of use of Standard Italian proceeded alongside with its stylistic diversification and the adaptation of its pragmatic and stylistic potential for informal, colloquial use, which called in question the status of certain structures, previously regarded as substandard ones. The analysis of E. Coseriu’s language variation theory as applied to the Italian language allows to classify modern Italian sociolinguistics and historical language studies as developing the functional trend typical of European linguistics.