Nibali maintained his lead of 1 minute, 26 seconds over Cadel Evans and remains on course to win his country's biggest cycling race for the first time. He finished third and second in his last two Giro d'Italia races.
American Taylor Phinney was forced to retire midway through the stage because of saddle sores. He had hoped for a stage win, while also working for team leader Evans.
Mauro Santambrogio started the day fourth but lost more than 2 minutes to slip to sixth.
Monday was a rest day after two tough mountain stages in snowy conditions.
The 17th stage Wednesday is a flat 158 miles from Busseto to Cherasco. It could be ideal for Mark Cavendish who celebrated his 28th birthday on Tuesday to claim a fifth stage victory in this year's race.
The Giro ends May 26 in Brescia.