The former prime minister, centre-right leader and media billionaire died at the age of 86 on Monday.
He was suffering from a rare form of leukaemia.
Berlusconi’s coffin was greeted by applause from a crowd of mourners in the square outside the cathedral and received by an inter-force guard of honour.
After the coffin was taken inside, Berlusconi’s children, Marina, Pier Silvio, Barbara, Eleonora and Luigi, entered behind it along with his partner Marta Fascina.
By the time the coffin reached the altar, Marina and Pier Silvio Berlusconi and the deceased’s brother Paolo were in tears, as were Fascina and Deputy Prime Minister and Foreign Minister Antonio Tajani, the coordinator of Berlusconi’s centre-right Forza Italia (FI) party.
President Sergio Mattarella and Prime Minister Giorgia Meloni and Belusconi’s second ex-wife Veronica Lario were among around 2000 people attending the funeral.
A delegation from the opposition, centre-left Democratic Party (PD) headed by leader, Elly Schlein, was in attendance too.
But ex-prime minister and opposition 5-Star Movement (M5S) leader Giuseppe Conte was not present, and neither were Italian Left (SI) leader Nicola Fratoianni or Green chief Angelo Bonelli.
Archbishop of Milan, Mario Delpini, said Berlusconi was a man full of life, love and joy.
“Silvio Berlusconi was certainly a man of politics,” said Delpini during the service.
“He was certainly a man of business.
“He was certainly a figure who acquired notoriety.
“But at this time of farewell, of prayer, what can we say of Silvio Berlusconi?
“He was a man: a desire for life, a desire for love, a desire for joy.
“And now we celebrate the mystery of completion.
“That is what we can say about Silvio Berlusconi - he is a man and now he meets God.”
Thousands of people were following the funeral via big screens in the square outside the cathedral with millions watching it live on television.
Many of the people in the square are fans of AC Milan, and some had come considerable distances to be there.
The media billionaire owned Milan from 1986 until 2017 and, in that time, they were crowned European champions five times and won eight Serie A titles on the way to collecting a total of 29 trophies.
There were chants of “Silvio, Silvio” and “there’s only one president” before the service, but silence gripped the square once it started.
ANSA