The three-time former prime minister told thousands of supporters outside his residence in Rome that he would stay on in politics despite the vote, saying it was "a day of bitterness, a day of mourning for democracy".
"We are not going to retire to some convent," Berlusconi said in a defiant speech, as fellow senators held rounds of voting that forced him from parliament for the first time in his 20-year political career.
Motions put forward by Berlusconi's allies in the Senate in an attempt to block the expulsion procedure were rejected one by one in a dramatic session in which dozens of lawmakers took the floor to support him.
One loyalist senator even compared the scandal-tainted Berlusconi to South African anti-apartheid icon Nelson Mandela and two rival senators almost came to blows.
Many senators from his party wore black in mourning.
Senate speaker Pietro Grasso said the failure of the motions meant that a proposal "abolishing the election of senator Silvio Berlusconi" was considered approved.
Berlusconi is now banned from taking part in a general election for six years and has lost parliamentary immunity, which offers safeguards against arrest.
Rumours are rife in Rome that an arrest could be imminent although Berlusconi's lawyers have dismissed the prospect as "absurd" given that he has already had to give up his passport and is not a flight risk.
Experts said the expulsion marks another step in Berlusconi's slow-motion demise, although he will continue to wield major clout even as an ex-lawmaker.
Opinions were mixed in the streets of Rome.
"We managed to put an end to 20 years of fascism, we can put an end to 20 years of Berlusconism too. I hope then we will become a more grown-up country," said Giulio, a passerby in the trendy Trastevere district.
At the pro-Berlusconi rally, however, supporters including his girlfriend Francesca Pascale belted his campaign anthem "Thank God Silvio's Here!" and held up placards saying the expulsion was "a coup d'etat".
"I think he is the victim of a prejudice of a part of the political system that has always wanted to eliminate him," said Augusto Leone, a student.
Several polls show that the 77-year-old's popularity is undimmed among core supporters and a centre-right coalition led by him as figurehead could win elections.
Berlusconi left his residence shortly after the result of the vote was announced to be with his family at his villa near Milan -- the site of some of the raunchy "bunga bunga" parties for which he has been convicted.
His daughter, Marina Berlusconi, who has denied persistent press rumours that she could succeed him, said in a statement: "This country and this democracy should be ashamed of what my father is suffering."
The momentous vote comes at an economically crucial time for Italy, which is struggling to end its longest post-war recession, and just as parliament debates a budget aimed at slashing high debt and deficit levels.
Centre-left Prime Minister Enrico Letta has called for a "non-chaotic situation in Italy" and said a division within Berlusconi's ranks "will help stability".
A group of dissidents led by Berlusconi's former protege, Deputy Prime Minister Angelino Alfano, broke away from his party this month to form their own group.
Alfano and his supporters voted against Berlusconi's expulsion but will stay in Letta's left-right coalition.
The government will therefore survive even though Berlusconi's Forza Italia party has pulled out of the coalition after an uneasy cohabitation with its leftist rivals, who narrowly won a February general election.
The coalition now has a narrower Senate majority of around 10 seats and could be vulnerable to populist attacks.
"Berlusconi is still extremely powerful, although that power is declining," said James Walston, a professor at the American University in Rome.
"He still has enormous resources, he still has his media, he still has lots of very diehard supporters inside and outside parliament," he said.
Berlusconi is currently appealing other convictions for having sex with an underage prostitute and abusing the powers of the prime minister's office.
He also faces trial for bribing a leftist senator to join his party's ranks and could come under investigation for paying off trial witnesses.
At a small anti-Berlusconi protest near the Senate, veteran campaigner Gianfranco Mascia said: "We have to de-Berlusconi this country. He should be banned."
But Lilli D'Ottavio, a Berlusconi supporter who came from Udine in northern Italy to see her leader, said his legal entanglements would not change her mind.
"Berlusconi will never end because an idea never dies."