Pictures showed Mr Berlusconi, 73, with blood around his mouth and on his face. Reports suggested he had either been punched or hit with an object.
Mr Berlusconi was taken to hospital. A first medical report said two teeth were damaged, with one broken.
A man, who reportedly has a history of mental problems, has been arrested.
Massimo Tartaglia, 42, had no previous criminal record, police were quoted as saying.
After the attack on Sunday evening the prime minister, looking dazed, was helped to his feet by aides and put in a car. He got out and tried to climb on the car to show he was all right, before being driven away.
It was a typical show of defiance by a political fighter, says the BBC's Duncan Kennedy in Rome.
Mr Berlusconi was to be kept under observation in a hospital in Milan for 24 hours, the Italian news agency Ansa reported.
At hospital he was quoted as saying: "I'm well, I'm well."
Scuffles
Mr Berlusconi had been greeting supporters in a square in Milan when the assault took place.
According to Italian newspaper, Corriere della Sera, a small group of protesters were shouting slogans and whistling during the rally.
There were reported to have been scuffles between the hecklers and security staff.
During the gathering he told supporters: "They paint me as a monster, but I don't think I am one - firstly because I am good-looking and secondly because I'm a decent chap".
The incident will prompt questions about Mr Berlusconi's security arrangements, says our correspondent.
But he is a gregarious man who likes to mingle with crowds, he adds.
He is also a divisive figure who attracts intense loyalty from some and utter disdain from others.
Mr Berlusconi has been under pressure in recent months.
His private life has been in the spotlight, amid allegations that he slept with prostitutes, and after his wife filed for divorce.
He has dismissed accusations of ties to the Mafia, and criminal cases against him have resumed after a law giving him immunity was overturned.
A week ago tens of thousands of people attended an anti-Berlusconi rally in Rome.
