Pub on island in Italian city (4)
I believe the answer is:
bari
'italian city' is the definition.
(Bari is a city in Italy)
'pub on island' is the wordplay.
'pub' becomes 'bar' (both are drinking establishments).
'on' says to put letters next to each other (in a down clue, letters appear on others).
'island' becomes 'i' (geographical abbreviation).
'bar'+'i'='BARI'
'in' is the link.
(Other definitions for bari that I've seen before include "Adriatic resort" , "Adriatic seaport" , "Adriatic port" .)