Jacques Moretti and his wife Jessica, owners of Le Constellation bar in Crans-Montana, are under investigation for negligent homicide and other crimes linked to the blaze that killed 40 people and injured more than 100, many of them teenagers.
Jacques Moretti was detained on January 9 but released on bail on Friday.
Italian Prime Minister Giorgia Meloni overnight called Moretti's release "an affront to the memory of the victims ... and an insult to their families".
Six of those killed in the bar blaze were Italian as were 10 of the injured.
A government statement on Saturday said Meloni and Foreign Minister Antonio Tajani instructed Italy's ambassador to immediately contact Beatrice Pilloud, the chief prosecutor in Switzerland's Valais canton, to convey Italy's "strong indignation" over Moretti's release.
It added that the court had taken the decision despite the seriousness of the alleged crime, the risk of flight and the possibility of evidence being compromised.
"The whole of Italy is clamouring for truth and justice, and is calling for respectful measures to be taken in the wake of this disaster, which take full account of the suffering and expectations of the families," the statement said.
Meloni and Tajani also ordered ambassador Gian Lorenzo Cornado to return to Rome to determine what further action to take, it said.
Switzerland's Foreign Minister Ignazio Cassis, from the Italian-speaking canton of Ticino, said he spoke with Tajani and that the neighbours reaffirmed mutual support following the tragedy.
A spokesperson for the Swiss foreign ministry said it has not been informed of the decision to recall Italy's ambassador but such a move was part of normal diplomatic practice and would not be permanent.
Swiss prosecutor Pilloud confirmed to Swiss news agency Keystone SDA that she had been contacted by the Italian ambassador but explained that a separate court had ordered Moretti's release.
"I do not wish to be responsible for a diplomatic incident between our two countries. I will not give in to any possible pressure from the Italian authorities, which is why I advised the ambassador to address himself to the Swiss political authorities," she said.
Moretti was released under a bail arrangement that included a 200,000 Swiss franc ($A373,500) payment and an order to report daily to a police station.
Lawyers for the victims of the fire and their families said they were struggling to understand the court order, adding that their clients were concerned about evidence disappearing.
"It is another slap on a wound that will never heal," Andrea Costanzo, whose 16-year-old daughter Chiara died in the fire, said in comments published in Italian newspapers on Saturday.
The Morettis have both expressed grief over the tragedy and said they would co-operate with prosecutors.
In a statement following Jacques Moretti's release, their lawyers said they would "continue to comply with all requests from the authorities".
