Learn Spanish (Latin America): Mi hermana estudia italiano.

Estudiar is the dictionary form of the verb, meaning "to study." Because the subject is mi hermana (which counts as "she"), we drop the -ar and add the ending -a for regular -ar verbs. If you were talking about yourself, it would be yo estudio.

Why isn't italiano capitalized like it is in English?

In Spanish, the names of languages (like italiano, español, or inglés) and nationalities are written with lowercase letters, unless they happen to be the very first word of a sentence.

Do I need to put el before italiano?

Not here! While Spanish often uses the article el before languages (like in El italiano es bonito meaning "Italian is beautiful"), you usually drop the el directly after verbs related to learning and using a language, such as estudiar (to study), hablar (to speak), and aprender (to learn).

If I had two sisters, how would this sentence change?

Everything describing them would become plural. "My" becomes mis, "sister" becomes hermanas, and the verb ending changes from -a (for "she") to -an (for "they"). The whole sentence would be: Mis hermanas estudian italiano.