The appeal to the Constitutional Court was launched by prosecutors including those from the Mills case.Berlusconi immunity law overruled (Thanks, Pico!)
They contended that immunity put Mr Berlusconi above the law and needed to be reversed.
Mr Berlusconi argued that immunity allowed him to govern without being "distracted" by the judiciary.
This is the second time Italy's highest court has thrown out Mr Berlusconi's bid for immunity, after an earlier attempt in 2004 failed.
Of the Constitutional Court's 15 members, five are selected by the president, five by the judiciary, and five by parliament.
They voted 9-6 to in favour of lifting Mr Berlusconi's immunity, the BBC's Duncan Kennedy says from Rome.