When you get off the train in Perugia and walk up to the city center, which stands on the top of a hill, you need to cross the city walls to enter the old city. There you may notice the entrance of a network of underground galleries. Walk in these galleries, and they will tell you one of the most extraordinary stories of the Italian Renaissance.
The Baglioni were one of these Italian families of condottieri who acquired their wealth through war during the Trecento and Quattrocento. By the end of the 15th century, the Baglioni were the masters of Perugia, in Umbria. Every member of the family had his own house in the best part of the city, and showed his power by building a high tower on the roof.
Another family, the Oddi, challenged their power, to the point that the city of Perugia became a battlefield. The Oddi had to leave Perugia, but violence continued as they repeatedly tried to come back. Murders were frequent, terror was permanent. During a short war with King of France Charles VIII, who happened to cross the country, the Perugians destroyed all the houses in the valley. Violence was a way of life.
The Baglioni finally overcame the Oddi, so they started killing each other. In 1500, during a marriage festival, half of the leading members of the family murdered the other half. Among the dead was Grifonetto Baglione, who was later represented as the Christ in one of Raphael's most famous paintings, The Deposition (1507). Some of the Baglioni could flee to the countryside. They came back the day after and seized power in the city, under the direction of Gianpaolo Baglione.
Gianpaolo ruled Perugia for a long time and participated in many wars. One day, as his soldiers were hungry and he had only eggs, wine, honey and aromatic herbs, he reportedly told his cooks to boil everything and serve it to the soldiers. They liked it and won the battle the day after. That strange soup became one of the most famous Italian desserts, the zabaglione (Gian-Baglione) 
But Gianpaolo was as ferocious as the rest of his family, and the Popes were afraid of his ambition. So Leo X invited him to Rome, promising him safety; Gianpolo came, and there he was tortured and beheaded.
After many other crimes and killings, the long-standing opposition between the city and the Popes turned into a war called the Salt War, in 1531. The pretext was a new tax on salt by Pope Paul III (Alessandro Farnese). Perugia did not accept the decision and was excomunicated. The leader of the city, yet another Baglione, was defeated by Pierluigi Farnese, who was the Pope's son.
The Pope could not accept the presence of such an arrogant city in Umbria, so close to Rome. He decided to humiliate Perugia and control it by building a monstrous fortress, the Rocca Paolina, in place of the Baglioni district. What is remarkable is that he didn't destroy the houses completely. He erected the fortress on top of them. The lower part of the houses and the streets became underground galleries. But the towers of Perugia were no more.
In 1860, when the new king of Italia Victor Emanuel II liberated the city from the Popes, the first thing the citizens of Perugia did was to demolish the much-hated Rocca Paolina and replace it with a square and the Prefecture hall. Nowadays there is a pleasant garden behind the Prefecture; when the weather is clear you can see the countryside until Assisi and the basilica St. Francis.
The underground city still exists. You can walk along the phantom Via Baglioni and enter houses that have been dead for more than 500 years. And it's useful too: long escalators connect it to the carparks in the lower part of the city, protecting the people from the rain.
: other sources say that the word comes from the Illyrian sabaium, beer.