Josipovic thanked Italy for great support to Croatia since its independence as well as to the country's European Union membership aspirations.
Apart from the excellent political relations, economic relations are also on a high level given that Italy is one of Croatia's major trading partners, the Croatian president said adding that they had considered possibilities of new investments in infrastructure and tourism.
As for the regional policy and Croatia's prospective admission to the EU in July 2013, the two presidents agreed that it was important for the region that all southeastern European countries once join the EU.
"We have remembered some difficult moments in our joint history, and I have expressed satisfaction with Italy's acceptance of compensation payment pursuant to the Osimo Accords," Josipovic said.
We are on the path of great reconciliation between Italy, Croatia and Slovenia in this Adriatic region which has experienced horrendous things that caused much anguish and serious consequences, the Italian president said.
He expressed satisfaction with the creation of the spirit of permanent rapprochement between Italy and its south Slavic neighbours.
Napolitano voiced satisfaction with paying his visit to Croatia just after it finalised its accession negotiations with the European Union, adding that his country has always supported Croatia's EU membership bid.
Croatia is entering the EU in a very difficult moment in conditions of the economic and financial crisis, and the answer to those problems lies in the further interconnections and enlargement of the EU, the Italian head of state said.
The admission of Croatia as a new member shows that the EU has realised that it must expand to include new members that can contribute through their vigour to the accomplishment of the joint goal of Europe meaning something in global proportions, Napolitano said.
The two presidents also discussed the position of the respective minorities in Croatia and Italy with Napolitano saying that Italy deeply appreciates also all what Croatia has done for the protection of ethnic minorities, notably ethnic Italians.
He also commended Croatia's contingent in the NATO-led ISAF mission in Afghanistan where so far 40 Italian soldiers have died in that mission which he described as a difficult and dangerous.
Later in the day, Napolitano gave a speech in the Croatian parliament, and met Parliament Speaker Luka Bebic and Prime Minister Jadranka Kosor.
Napolitano arrived in Croatia on Thursday morning for a day-long official visit .This was Napolitano's first visit to Croatia since he became president in May 2006. He had visited Croatia in 1997 in his capacity as foreign minister.
Napolitano was accompanied by Foreign Minister Franco Frattini.
The visit was originally planned to last two days, during which Napolitano was to visit Pula on Friday to meet with representatives of the Italian community, but was cut short because of the financial crisis in Italy. The Italian Parliament is expected to adopt an austerity budget on Friday, envisaging 47 billion euros in cuts by 2014.
Josipovic has met Napolitano several times. They last met in Rome on June 2 at a ceremony marking the 150th anniversary of Italy's unification.