Shots rang out in Chigi Square near a busy shopping and strolling area shortly after 11:30 a.m. just as Premier Enrico Letta and his new ministers were taking their oaths at the Quirinal presidential office, about a kilometer (half-mile) away.
The suspected gunman, dressed in a dark business suit, was immediately grabbed by other police in the square, wrestled to the ground and taken away.
The shooting "was the tragic gesture of an unemployed man," Interior Minister Angelino Alfano told reporters after briefing Letta and his new Cabinet about the attack.
A woman passing by during the shooting was also slightly injured, Rome's mayor said. It was unclear if she was grazed by a bullet or hurt in the panic sparked by the gunfire.
It was not immediately clear if the shooting outside the Chigi Palace, which houses the premier's office and other government offices, was timed to coincide with the swearing-in ceremony. But tensions have been running high in Italy following inconclusive elections in February that left the country mired in political deadlock amid a deep recession.
The 46-year-old Letta nailed down a coalition deal only a day ago between two bitter political enemies - his center-left forces and the conservative bloc of ex-Premier Silvio Berlusconi.
Reporters inside the Chigi Palace press office heard the shots and raced outside. An AP television producer saw the two wounded Carabinieri officers in the square outside the palace. One of them lay on the pavement with blood pouring out of his neck.
Alfano said the alleged gunman - 49-year-old Luigi Preiti - wanted to kill himself after the shooting but ran out of bullets. He said six shots were fired.
Security was immediately stepped up near key venues in the Italian capital, but Alfano said authorities were not worried about related attacks.
"The general situation of public order is not causing any worry," he said. "Our initial investigation indicates the incident is due to an isolated gesture, although further investigations are being carried out."
Doctors at Rome's Umberto I Polyclinic said the more seriously injured of the two police officers was a 50-year-old brigadier. They told reporters that a bullet had entered the right side of the officer's neck, damaged his spinal column and was lodged near his shoulder.
The doctors said it wasn't yet known if the spinal column injury had caused any paralysis.
The other victim was a 30-year-old officer who was shot in the leg and had suffered a fracture, hospital officials said.
Preiti was taken to another Rome hospital. News reports said a protective collar was seen around the man's neck.
Italian media reports said the assailant was from southern Calabria and had lived for several years in northern Italy before moving back to Calabria after his marriage fell apart.
Sky TG24 TV quoted the man's brother as saying the alleged attacker had lost his job in a construction firm and was upset over marital problems.
An aide to Foreign Minister Emma Bonino told reporters at the presidential palace that the new Cabinet members were kept briefly inside for security reasons until it was clear there was no immediate danger.
The shooting sparked ugly memories of the 1970s and 1980s in Italy, when domestic terrorism plagued the country during a time of high political tensions between right-wing and left-wing blocs.
The new Cabinet ministers were seen smiling in a group photo as news of the shooting broke and it was apparent they weren't immediately aware of the attack.
"The news arrived after the swearing-in," said Dario Franceschini, one of the new ministers. "Premier Letta is following the situation."
Metal fencing closes off Chigi Square, which flanks Via del Corso, one of Rome's most popular streets with strollers. The public can cross the square by showing identification, and sometimes people can cross it without being stopped. It was unclear if the assailant had asked permission to enter the square.
Rome was jammed Sunday with tourists and residents enjoying a warm sunny morning on the last day of a four-day weekend.