Ranieri is an admirer of his fellow Italian and is willing to battle it out with Juventus and Internazionale for the 26-year-old's signature.
There are other clubs in the frame from England, including Manchester United who have been looking to Serie A for summer targets for some time.
With Gus Poyet leaving Stamford Bridge, Chelsea are certainly looking to bolster their midfield with Giovanni van Bronckhorst and Emmanuel Petit high on Ranieri's wanted list.
Baiocco has had a fine season with Perugia, playing 29 times in Serie A and scoring once.
He returned from two loan stints with Viterbese a better player and is seen as a vital cog in the Perugia midfield.
As he is under contract until 2003, there will be a sizeable fee involved if he does leave Renato Curi.
