A real estate, media and football mogul who moved into politics, Berlusconi was a controversial and at times divisive figure in Italian public life who shaped Italian politics for decades.
He died on Monday at the age of 86 after a period of ill health.
Italian President Sergio Mattarella and Prime Minister Giorgia Meloni were among those attending the service, as was almost the entire cabinet.
About 2000 people were allowed into the cathedral, including Hungary's Prime Minister Viktor Orban, the emir of Qatar and Iraqi President Abdul Latif Rashid.
Top people from industry, entertainment and sports also came.
Most European Union countries were represented by their ambassadors.
Four large screens broadcast the service onto the square outside where thousands of people had gathered.
Eyewitnesses said the atmosphere amidst Berlusconi's supporters outside the cathedral felt a lot like a football match.
Berlusconi supporters had started gathering hours before the funeral service began.
Men, women, young people and pensioners stood behind the barriers clutching Berlusconi flags and chanting: "Silvio! Silvio!".
They also sang "C'è solo un presidente" (There is only one president).
After the funeral, a voice was heard crying out - "Grazie, Silvio!" (Thank you, Silvio!").
Official mourning events for Berlusconi are taking place all across Italy.
He enjoyed a successful career as a businessman before reinventing himself as a conservative politician, who proved prone to public gaffes and run-ins with the law.
He was Italy's longest-serving prime minister, with terms in office in 1994, 2001-2006 and 2008-2011.
Berlusconi's rise to power was meteoric, winning his first elections in 1994 at the helm of a new party named after a football slogan, Forza Italia, or Go Italy.
He resigned in disgrace in 2011, at the height of Italy's debt crisis that risked destabilising the entire eurozone.
Matteo Salvini of the populist League replaced him as the leader of Italy's conservative bloc and his Forza Italia party slid into irrelevance, until its return in 2022 as a minor coalition party in Meloni's conservative government.
His death leaves Italy's ruling coalition in a precarious position.
Some in Italy criticised the extent of the ceremonial measures to mourn Berlusconi.
The government marked Wednesday as a national day of mourning, with public buildings flying their flags at half mast.
This is not usual following the death of a former prime minister and is mostly reserved for catastrophes with large numbers of dead.
Alongside the state funeral, the government has largely stopped work for three days.
Parliamentary meetings and votes have been cancelled for about a week.
"What an exaggeration, completely out of place," said former minister and European commissioner Emma Bonino, in La Republica newspaper.
Critics noted that parliament still met even after the deadly Mafia bombings in 1992 against lawyers Giovanni Falcone and Paolo Borsellino or the murder of former prime minister Aldo Moro by militants in 1978.
La Stampa newspaper referred to the current situation as "mourning that divides" people.
But supporters, companions and coalition partners of Berlusconi viewed things very differently.
They praised the Milan native as one of the most important men in the country in recent decades.
Meloni wrote in a guest article for the Corriere della Sera that many had tried to defeat Berlusconi "by unfair means".
"In the end, however, his opponents lost," she said.
10°C