Is it true that for submission purposes italics in a manuscript should be replaced with underlined words? What is considered standard for the industry?

When you want a portion of your text be italicized in the printed copy, use italics when submitting a manuscript. This is standard, so do so unless an editor or publisher specifically requests otherwise.

This also raises a larger question about the debate over italicizing versus underlining. Back in the days before computers made it a cinch to manipulate the look of text, underlining was used to off set text, such as indicating a book title. Some writers have held onto this practice even though they’ve tossed their typewriters. While underlining isn’t necessarily wrong, it’s become old fashioned. (In fact, some file conversion programs actually take all underlined text and italicize it.) If you’re holding onto the old ways, try and get in the habit of italicizing what you used to underline.

But let’s back up. How do you know when to italicize? Italics are used for emphasis—sparingly—when the structure of the sentence itself doesn’t already convey this. Some writers mistakenly italicize any and all titles, but only book-length titles get this honor. (And most newspapers make this all the more confusing by using quotation marks for all titles. But newspapers get to play by their own rules.) Titles of shorter works, like short stories and poems, should be put in quotation marks.