Gentile called his philosophy 'actual idealism' or 'actualism' to distinguish it from Hegel's system. For Hegel, reality unfolds through a dialectical process that includes nature and objective spirit as moments of the Absolute. Gentile rejected any reality outside the act of thinking itself. In his major work, The Theory of Mind as Pure Act (1916), he argued that the pure act of thought is the only reality—nature, past, and even the individual ego are constructs of present thinking. This radical subjectivism dissolved the distinction between thought and action, theory and practice, making every act of thinking a moral and creative act.

Gentile and Croce co-edited the journal La Critica from 1903 to 1922 and were the twin pillars of Italian idealism. Their friendship ended in 1924 over fascism: Gentile embraced Mussolini, Croce became Italy's most prominent anti-fascist intellectual. The split was philosophical before it was political. Croce maintained a distinction between theoretical and practical activity, while Gentile rejected it. When Gentile wrote the Manifesto of the Fascist Intellectuals in 1925, Croce responded with the Manifesto of the Anti-Fascist Intellectuals. Their opposition defined the Italian cultural landscape for a generation, dividing intellectuals between fascist engagement and liberal resistance.

The Gentile Reform of 1923 was the first major legislative act of Mussolini's government and the most enduring. It restructured Italy's entire school system: raising the compulsory school age, creating a rigorous classical secondary track for future elites, and integrating early childhood education into the state system. But its significance exceeded pedagogy. Gentile saw education as the process by which the state forms the individual consciousness, making the reform an instrument of fascist nation-building. The philosopher who wrote that 'everything is in the State' designed schools to produce citizens whose wills were fused with the national will. The reform outlasted fascism, shaping Italian education until 1962.

On April 15, 1944, Gentile was shot in his car outside his villa in Florence by partisans of the Gruppi di Azione Patriottica, a communist-led resistance group. The immediate perpetrators were Bruno Fanciullacci and Antonio Ignesti. But who ordered the killing and why has never been fully settled. Some accounts emphasize Gentile's role as ideological spokesman for the Fascist Social Republic and his position as president of the Academy of Italy. Others suggest internal resistance politics or personal motives. The debate reflects Italy's unresolved reckoning with fascism: was Gentile a legitimate military target or an intellectual who should have faced trial? His death remains a flashpoint in Italian historical memory.

Gentile's ethical state was not a neutral arbiter of competing interests but a moral organism with a will of its own. Drawing on Hegel but radicalizing him, Gentile argued that the state is the concrete realization of universal will—the ethical substance in which individual freedom is fulfilled, not suppressed. In this framework, there is no sphere of private morality independent of the state. The individual's true freedom consists in willing what the state wills. This dissolved the liberal distinction between state and civil society and provided the philosophical justification for totalitarian rule: the state could legitimately absorb all aspects of life because, in Gentile's system, there was nothing outside it worth preserving.

Gentile began as a liberal in the broad Italian sense—sympathetic to the Risorgimento tradition and critical of positivism and Marxism. But his idealism already contained the seeds of his later politics. If reality is the pure act of thinking, and if the state is the highest expression of collective thought, then liberal individualism becomes philosophically incoherent. Gentile saw his turn to fascism not as a betrayal but as a logical development: liberalism had failed to create a unified national consciousness, and fascism was the instrument of that creation. He called his position a 'liberal fascism,' arguing that true liberty is realized in the ethical state rather than against it. Critics see this as a rationalization for tyranny.

The 1932 essay 'The Doctrine of Fascism' was published under Mussolini's name in the Enciclopedia Italiana, but Gentile was its primary author. He provided the philosophical framework—the rejection of individualism, the exaltation of the state, the concept of fascism as a spiritual and totalitarian creed—while Mussolini contributed political rhetoric and authority. Gentile had already laid out these ideas in earlier writings, including his 1928 Foreign Affairs article 'The Philosophic Basis of Fascism.' The essay gave Italian fascism its most systematic ideological statement, and its attribution to Mussolini was itself a fascist act: the regime presented its ideology as the thought of the Duce, not a philosopher.