Vatican City is a sovereign state that includes a city and its dependent territories.
A city-state is a sovereign state that consists of a city and its dependent territories . Vatican City ( [ ˈvætᵻkən_ˈsɪti ] Città del Vaticano [ tʃitˈta ddel vatiˈkaːno ] Civitas Vaticana ) , officially Vatican City State or the State of Vatican City ( [ Stato della Città del Vaticano , links = no ] [ Status Civitatis Vaticanae , links = no ] ) , is a walled enclave within the city of Rome . However , formally it is not sovereign , with sovereignty being held by the Holy See , the only entity of public international law that has diplomatic relations with almost every country in the world . The independent city-state , on the other hand , came into existence in 1929 by the Lateran Treaty between the Holy See and Italy , which spoke of it as a new creation , not as a vestige of the much larger Papal States ( 756 -- 1870 ) , which had previously encompassed much of central Italy . According to the terms of the treaty , the Holy See has `` full ownership , exclusive dominion , and sovereign authority and jurisdiction '' over the city-state .