Much of the pre-match build-up had focused on Italy's impressive record against their visitors, with the Germans now having not won any of their last seven meetings, a run that stretches back to 1995.
That sequence looked like it could be ended when Mats Hummels gave Germany an eighth-minute lead as he headed Toni Kroos' corner in off the post before the visitors controlled the rest of the first half in coach Joachim Low's 100th match in charge.
While Germany generally dominated, Italy pulled one back through Ignazio Abate in the 28th minute, but Prandelli acknowledged that his side still have plenty of work to do to match the best sides in the world.
"In my view we played a good game. We suffered a little with their passing, as they played without strikers, so it was tough at the start to figure out how to approach them," he told Rai Sport.
"It (the Germany goal) was a corner and clearly we have to improve a lot, especially on set plays.
"We wanted numerical superiority in midfield, it worked and we had around 20 very strong minutes in which we had the opportunities to win.
"Germany are one of the strongest sides in the world. If we think that we're the best and can dominate Germany, then we're wrong."
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