The new rules dictate that sex workers face a £360 fine if they don't don the reflective coats.
The deputy mayor of town that introduced the rule in Milan said the prostitutes should "be treated as employees who work on road construction".
Luciano Sinigaglia said the ruling would become law "by the start of September".
He even said that any hookers who ignored the policy would be arrested.
Local Gino Angelucci joked: "Let us hope men don't get confused and try to pick up a road worker by mistake."
Roadsigns were put up in the Italian city of Treviso for the same reason in 2010.
They show a big-breasted woman in a mini skirt and high heels.
The signs read: "Prostitutes ahead."
But motorists complained they were being distracted by the sign.
Fino Veznio, 34, said he "had to slow down to get a proper look" when he saw the sign.
He said: "I couldn't believe it. The woman has a miniskirt and high heels on and very big breasts.
"Does it mean I have to look out for prostitutes crossing or that they are available around here?
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