He was Italy's longest-serving post-war prime minister, heading two successive administrations between 1983 and 1987, a remarkable achievement in a country known for a high turnover of governments.
The son of a Sicilian lawyer, he was brought up in Milan, and was first elected to parliament in 1968. A decade later, as the Socialists became more and more the key to forming a government without the Communists, Italy's second-largest party, Mr Craxi worked to distance his party from their former allies, and became leader of the Socialists in 1981.
Defiance
He stood up to the United States in 1985, refusing to hand over to the American military at a Sicilian air base the Palestinian commandos who hijacked the Achille Lauro cruise ship and killed an elderly wheel-chairbound American passenger.
But Mr Craxi also defied the Communists - the largest communist party in the West and a big-vote getter in Italian politics - by allowing Nato nuclear-tipped missiles to be installed in Sicily. He also boasted good relations with the Roman Catholic Church. In 1984, he presided over a delicate re-negotiation of a 1929 treaty regulating relations between Italy and the Holy See. This included a major concession from the Vatican to revise the so-called Concordat, eliminating Roman Catholicism as Italy's official state religion. Mr Craxi was delighted by his political longevity.
But his saying "the best vacation is power" came back to haunt him in the early 1990s when his Socialists, along with the Christian Democrats they ruled with in coalition after coalition, went down in disgrace.
Bribes
He fell suddenly and dramatically during the huge "Tangentopoli" (Bribesville) scandal which began in February 1992 when an associate was caught taking a bribe. Magistrates probed allegations that he had taken millions of dollars in bribes from businessmen. Support for the Socialists, once the nation's third-largest party with up to 15% of the vote in the late 1980s, fell away and the party later disbanded.
Mired in scandal, Mr Craxi was forced to resign as head of the Socialist Party he dominated for 17 years.
A mob gathered outside the central Rome hotel which Mr Craxi had long used as his base and the former premier came under a hail of coins and pieces of bread as he left the building.
In absentia
After fleeing to Tunisia, Mr Craxi was tried in absentia and twice convicted by Italian courts, receiving a total of 27 years in prison, of which nine years and eight months were upheld by appeal courts.
In the first case, he was sentenced to five and a half years in jail in a scandal over bribes paid by insurance company SAI to win an insurance contract from state energy group ENI.
The second case, in which he was alleged to have taken bribes for himself and the Socialists in exchange for supporting firms' bids to build the Milan metro, ultimately won Mr Craxi a four-year jail sentence after crawling its way through the legal system.
He was declared an official fugitive from justice in July 1995.
Ill health
Mr Craxi had been in poor health for years, suffering from complications of diabetes. Last November he underwent surgery to remove his right kidney.
He had hoped to return to Italy for treatment, but refused a deal under which he would have been treated in a Milan hospital while in custody.
Italian Prime Minister Massimo D'Alema said last year that the centre-left government would have no objection to his return to Italy but the courts would have to decide any leniency over outstanding charges against him.
On hearing of his death, the Italian senate and chamber of deputies immediately suspended its session for 10 minutes.
