After the second war, Faà di Bruno was promoted to the rank of frigate captain and given command of the steam corvette San Giovanni. On 23 February 1863 he departed from Genoa for Philadelphia, Pennsylvania, arriving on 20 May. There he inspected the ironclad Re d'Italia, then under construction for the Italian navy. He then steamed to New Orleans, where he unsuccessfully attempted to make his way up the shallow first stretch of the Mississippi River. He then steamed north to Canada, where the San Giovanni became the first Italian ship to enter Baffin Bay, and then turned south again and made his way to Rio de Janeiro, where he stayed several months giving support to the Italian community. In 1865, Faà di Bruno was given command of the steam corvette Castelfidardo and began working with Admiral Giovanni Vacca in developing the navy into a world-class force. He was sent to Tunisia, where Admiral Albini had already stationed Italian forces, because trade disputes involving the European powers had sparked local unrest. He negotiated a compromise between Italian and Tunisian fishermen, earning himself a decoration from the Bey of Tunis, Muhammad III as-Sadiq.
Faà di Bruno was promoted to captain and was ordered to take command of the Re d'Italia, which he had inspected in the United States. In May 1866, at the start of the Third Italian War of Independence, he was ordered to join the fleet under Admiral Carlo Pellion di Persano at Taranto, from where they proceeded to Ancona. During the journey the Re d'Italia suffered a minor fire in the coal bunkers. On July 20, while some of the fleet was bombarding the forts of Lissa, Admiral di Persano, with his flag aboard the Re d'Italia, sailed to meet the Austrian fleet under Wilhelm von Tegetthoff, transferring his flag to the Affondatore before the beginning of the battle. The Italian line faltered, and the centre—the Re d'Italia with Palestro and under Faà di Bruno—was isolated. First, the rudder of the Re d'Italia was hit, immobilising it; second, the SMS Erzherzog Ferdinand Max rammed her, punching an 18-foot hole in her side below the waterline. Having struck her colours, she sunk within minutes, with the loss of most of her crew. According to some reports, Faà di Bruno shot himself on the bridge before going down. The majority of historians are more inclined to accept the story of Commander Andrea del Santo, the deputy chief of staff to Persano, who recalled that Faà di Bruno jumped into the sea but was dragged under by the sinking ship. Some historians have accused Faà di Bruno of being a poor seaman, although an able fighter. Although the greatest blame for the loss at Lissa falls on Persano, it was Faà di Bruno who decided, upon sighting an enemy bow, to reverse course, losing headway and being caught almost at a standstill by the ramming Ferdinand Max. On 15 August 1867, the Italian government awarded Faà di Bruno a Gold Medal of Military Valour, with the citation: "For his conduct in the naval operations at Lissa on the days of 18, 19 and 20 July 1866". Three vessels have been named after him: