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The four-year term was immediately cut to one under an amnesty law approved in 2006 by the then centre-left government to reduce the overcrowding of Italian prisons.
Berlusconi was also banned from holding public office for five years by the Milan court.
His lawyers said late Friday they would appeal by November 10, according to reports, automatically suspending the application of the sentence.
Berlusconi is, however, considered certain to stave off any imprisonment or ban on his political activities through appeals. The verdict, connected to his Mediaset empire, came two days after he announced his retirement from politics.
His lawyer branded the verdict as "absolutely unbelievable".
"This is an incredible and intolerable political sentence. This is no doubt a political verdict, as political as all trials fabricated against me," Berlusconi said on his Italia 1 television channel.
During the trial, which began six years ago but was repeatedly suspended, Berlusconi was accused of artificially inflating the price of distribution rights bought by his companies and of creating foreign slush funds to avoid paying taxes in Italy.
The court also sentenced the media tycoon and 10 co-defendants to pay 10 million euros ($13 million) to Italian tax authorities for losses in what they called "large-scale fraud".
The tax scam helped to create secret overseas accounts and reduce profits to pay fewer taxes in Italy.
The prosecution had asked for a prison sentence of three years and eight months for Berlusconi, the longest-serving prime minister of post-war Italy.
Prosecutor Fabio De Pasquale said in June that Mediaset costs for the films had been inflated by $368 million from 1994 to 1998, and by 40 million euros from 2001 to 2003.
Berlusconi was at "the top of the chain of command in the sector of television rights until 1998", De Pasquale said at the time.
He had asked for a prison sentence of three years and four months for Mediaset president Fedele Confalonieri.
But Berlusconi's close aide in his business dealings was acquitted on Friday.
Mediaset shares tumbled 3.11 percent to 1.338 euros at Friday's close.
-- Ongoing woes --
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In court a week ago, Berlusconi was accused of paying for sex with then 17-year-old Moroccan exotic dancer Karima El-Mahroug.
He is also charged with abusing his position as prime minister by telling police to release her when she was arrested for petty theft in May 2010.
"I never had an intimate relationship of any kind with her," he told the court in only his second appearance at the trial in Milan which began last year and has heard from witnesses describing stripshows at his home.
The charge of exploiting an underage prostitute in Italy carries a maximum sentence of three years in prison and abuse of power up to 12 years.
Hollywood star George Clooney failed to appear on Friday to give evidence in the sex trial, leading the prosecutor to accuse the defence of seeking to slow the proceedings.
The sex trial was one of the last in a series of scandals that helped precipitate Berlusconi's downfall in November 2011, which was finally triggered by a parliamentary revolt against him and a wave of panic on financial markets.
Berlusconi, who owns AC Milan football club, three national television channels as well as several private villas, has frequently accused "leftist" prosecutors, notably in Milan, of plotting against him.
He said on Wednesday he would not run in elections early next year and hand his People of Freedom (PDL) party over to a successor, ending months of uncertainty over his candidacy.
Berlusconi's many legal problems also include the so-called Unipol trial in which he is accused of revealing confidential information about an investigation into a 2005 banking scandal.
Prime minister briefly in 1994, then from 2001 to 2006 and again from 2008 to 2011, Berlusconi has repeatedly benefitted from criminal statutes of limitation in his 33 trials in 18 years in Italian politics.
He was sentenced three times to a total six years and five months in prison in 1997 and 1998 for corruption, forgery and illegal party financing. The sentences were later scrapped by higher courts or fell under the statute of limitations.
"We are convinced that he will prevail in the appeal trial," said Angelino Alfano, a former justice minister and Berlusconi's expected successor at the helm of his PDL party.
Italian media and judicial officials widely expect the statute of limitations to kick in as soon as next year, which would imply that higher appeal courts will not even have to take on the case.
"Things cannot go on like this. We must do something," Berlusconi told Italia 1, adding that because of "a number of judges the country is becoming barbarian, beyond all bearing and no longer democratic".
He also branded Friday's verdict as "the use of the justice system for political ends".
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Berlusconi was also banned from holding public office for five years by the Milan court.
His lawyers said late Friday they would appeal by November 10, according to reports, automatically suspending the application of the sentence.
Berlusconi is, however, considered certain to stave off any imprisonment or ban on his political activities through appeals. The verdict, connected to his Mediaset empire, came two days after he announced his retirement from politics.
His lawyer branded the verdict as "absolutely unbelievable".
"This is an incredible and intolerable political sentence. This is no doubt a political verdict, as political as all trials fabricated against me," Berlusconi said on his Italia 1 television channel.
During the trial, which began six years ago but was repeatedly suspended, Berlusconi was accused of artificially inflating the price of distribution rights bought by his companies and of creating foreign slush funds to avoid paying taxes in Italy.
The court also sentenced the media tycoon and 10 co-defendants to pay 10 million euros ($13 million) to Italian tax authorities for losses in what they called "large-scale fraud".
The tax scam helped to create secret overseas accounts and reduce profits to pay fewer taxes in Italy.
The prosecution had asked for a prison sentence of three years and eight months for Berlusconi, the longest-serving prime minister of post-war Italy.
Prosecutor Fabio De Pasquale said in June that Mediaset costs for the films had been inflated by $368 million from 1994 to 1998, and by 40 million euros from 2001 to 2003.
Berlusconi was at "the top of the chain of command in the sector of television rights until 1998", De Pasquale said at the time.
He had asked for a prison sentence of three years and four months for Mediaset president Fedele Confalonieri.
But Berlusconi's close aide in his business dealings was acquitted on Friday.
Mediaset shares tumbled 3.11 percent to 1.338 euros at Friday's close.
-- Ongoing woes --
------------------
In court a week ago, Berlusconi was accused of paying for sex with then 17-year-old Moroccan exotic dancer Karima El-Mahroug.
He is also charged with abusing his position as prime minister by telling police to release her when she was arrested for petty theft in May 2010.
"I never had an intimate relationship of any kind with her," he told the court in only his second appearance at the trial in Milan which began last year and has heard from witnesses describing stripshows at his home.
The charge of exploiting an underage prostitute in Italy carries a maximum sentence of three years in prison and abuse of power up to 12 years.
Hollywood star George Clooney failed to appear on Friday to give evidence in the sex trial, leading the prosecutor to accuse the defence of seeking to slow the proceedings.
The sex trial was one of the last in a series of scandals that helped precipitate Berlusconi's downfall in November 2011, which was finally triggered by a parliamentary revolt against him and a wave of panic on financial markets.
Berlusconi, who owns AC Milan football club, three national television channels as well as several private villas, has frequently accused "leftist" prosecutors, notably in Milan, of plotting against him.
He said on Wednesday he would not run in elections early next year and hand his People of Freedom (PDL) party over to a successor, ending months of uncertainty over his candidacy.
Berlusconi's many legal problems also include the so-called Unipol trial in which he is accused of revealing confidential information about an investigation into a 2005 banking scandal.
Prime minister briefly in 1994, then from 2001 to 2006 and again from 2008 to 2011, Berlusconi has repeatedly benefitted from criminal statutes of limitation in his 33 trials in 18 years in Italian politics.
He was sentenced three times to a total six years and five months in prison in 1997 and 1998 for corruption, forgery and illegal party financing. The sentences were later scrapped by higher courts or fell under the statute of limitations.
"We are convinced that he will prevail in the appeal trial," said Angelino Alfano, a former justice minister and Berlusconi's expected successor at the helm of his PDL party.
Italian media and judicial officials widely expect the statute of limitations to kick in as soon as next year, which would imply that higher appeal courts will not even have to take on the case.
"Things cannot go on like this. We must do something," Berlusconi told Italia 1, adding that because of "a number of judges the country is becoming barbarian, beyond all bearing and no longer democratic".
He also branded Friday's verdict as "the use of the justice system for political ends".
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