The new Prime Minister, Pietro Badoglio, sent Castellano to Lisbon in order to contact Allied diplomats to set the conditions for the surrender of Italy. He ordered Castellano to insist that any surrender of Italy was subject to a landing of Allied troops on the Italian mainland. Badoglio also dared to ask for access to Allied military plans, which was not accepted. After complicated negotiations the government and king accepted the conditions for the armistice. On September 3, 1943, Castellano, in lieu of Badoglio, and General Walter Bedell Smith, in place of General Dwight D. Eisenhower, signed the armistice agreement in the town of Cassibile, near Syracuse, in Sicily. The agreement was not announced until September 8, when Badoglio addressed the nation during a radio broadcast.
Intervention in post-war Sicilian politics
After the armistice Castellano emerged as Sicily’s military commander. He had been given powers to hold talks to resolve the separatist threat to Italian unity. He became convinced that the Mafia was the strongest political and social force on Sicily to be reckoned with. He started to establish cordial relations with Mafia leaders. The general believed that law and order could be restored if "the system formerly employed by the old and respected Mafia should return to the Sicilian scene." Castellano made contacts with Mafia leaders and met with them several times. He gained the cooperation of Mafia boss Calogero Vizzini, who had supported separatism but was now prepared for a change in the island’s political situation. Together with Vizzini, he approached Trapani politician Virgilio Nasi to offer him the leadership of a movement for Sicilian autonomy with the support of the Mafia. The plan was to stage Nasi as a candidate for High Commissioner for Sicily to oppose the favourite, the Christian DemocratSalvatore Aldisio. Castellano’s initiative weakened the Sicilian Independence Movement of Andrea Finocchiaro Aprile. The Mafia, however, became a force of order and stability on the island and prevented a separatist overthrow by stifling extremist elements in the movement. The seeds were planted from which the Mafia would tremendously benefit in the decades to come.
Retirement and death
He wrote a number of books about his experiences during the War: Come firmai l'armistizio di Cassabile, published by Mondadori in 1945; La guerra continua ; and Roma Kaputt. In 1947, he retired from the Army and became the director of a chain of hotels and thermal baths for some years. He died in Porretta Terme on July 31, 1977.