New Orleans is in Italy! (7)
I believe the answer is:
salerno
'in italy' is the definition.
('Salerno' is part of 'italy')
'new orleans' is the wordplay.
'new' indicates anagramming the letters.
'orleans' is an anagram of 'SALERNO'.
'is' acts as a link.
(Other definitions for salerno that I've seen before include "European city!" , "Campanian port" , "City of Campania" , "Orleans (anag) - Italian port" , "Learn so as to go out to the Italian port city" .)