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I'm a fan of Rexo, in Condesa, on the corner of Vicente Suarez and Nuevo Leon. The restaurant is in a small building but has one of the most interesting three-level layouts I've seen ... two levels of dining, and a ground level bar that is very well regarded in Condesa for its martinis (it has a variety of them). The Italian dishes are solid, all priced around 80-150 pesos. The place has a really cool atmosphere at night.
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Rosetta in Roma is pretty much regarded as the best Italian restaurant in the city right now. I went once and liked it fine, but I also had a stomach bug, so I'm probably not the best critic. The ambiance is great -- it's in an old mansion with high ceilings, which kind of evokes an Italianate villa. The bread and pastas are all made in house.
I also recently visited Salotto in Polanco, a new Northern Italian place. It was good but it didn't knock my socks off. (Then again, I've never eaten Northern Italian food in Italy, so I don't have much to compare it to.)

