An old vicar retiring in Italian city (6)
I believe the answer is:
verona
'italian city' is the definition.
(Verona is a city in Italy)
'an old vicar retiring' is the wordplay.
'old' becomes 'o' (common abbreviation eg in OE for Old English).
'vicar' becomes 'rev' (short for reverend).
'retiring' says the letters should be written in reverse.
'an'+'o'+'rev'='anorev'
'anorev' written backwards gives 'VERONA'.
'in' is the link.
(Other definitions for verona that I've seen before include "Romeo and Juliet's city" , "Home town of Romeo and Juliet" , "City of NE Italy" , "City of Romeo and Juliet near Averno" , "scene in Shakespeare" .)