Berlusconi, 78, was convicted in 2013 of paying for sex with an under-age dancer known as "Ruby the heart stealer" and then abusing his power as premier to cover it up.
The conviction, a seven-year prison term and a lifetime ban from public office were overturned on appeal last year, triggering a counter-appeal by prosecutors to the Court of Cassation.
The court met on Tuesday for a hearing that could make or break the media tycoon's aspirations to return to the frontline of Italian politics.
The AC Milan owner has always denied paying for sex with the then 17-year-old Ruby and says he only tried to help th Moroccan national when she was later arrested because he thought she was a niece of former Egyptian president Hosni Mubarak.
Prosecutor Edoardo Scardaccione told the court such claims deserved contempt.
"The Mubarak's niece episode was worthy of a Mel Brooks film," he said. "The whole world was laughing at us behind our backs."
Scardaccione insisted all charges against the ageing party lover should be reinstated, saying "he had a dragon's passion for minors".
Berlusconi was not present at Tuesday's hearing in Rome, which lasted for three and a half hours before the judges retired to consider a verdict expected by the end of the day.
If his acquittal is upheld, Berlusconi will be free to spearhead opposition to landmark political reforms Prime Minister Matteo Renzi is trying to guide through parliament.
If the ruling goes against him, a fresh appeal trial will have to take place, an outcome analysts say would further diminish the billionaire's authority over his Forza Italia (FI) party.
"For Berlusconi's immediate future, the outcome is quite crucial," said Giovanni Orsina, an academic at the Luiss business school in Rome and an expert on the media magnate's impact on Italian politics.
Orsina believes Berlusconi's legal woes - he has just completed a community service for tax fraud - have helped Renzi dominate the political landscape.
"Berlusconi's clarity of mind basically disappeared (with the tax conviction)," he argued. "Since then he has been uncertain, unclear and politically ineffective.
"But if the case goes his way - and my feeling is that it is likely to - then he remains a very powerful man. As long as he has the votes in parliament he can damage Renzi."
Renzi relied on support from Berlusconi to steer landmark labour reforms through parliament late last year.
But their alliance collapsed last month after Renzi successfully backed an actively anti-Berlusconi candidate, Sergio Mattarella, to become Italy's new president.
The Forza Italia leader has since vowed to fight proposals to effectively abolish the Senate and adopt a new electoral law designed to produce governments with working parliamentary majorities.
The weakening of Berlusconi's influence was underlined Tuesday when FI lawmakers complained after they were ordered to vote against the government on the Senate reform bill, which was comfortably approved despite his interference.
The bill could yet face stiffer opposition however and Renzi is battling to keep some of his allies in parliament on board - a situation which means a revitalized Berlusconi could present him with major headaches, particularly in the Senate.
Even if Berlusconi shakes off the Ruby case, he could yet face further sanction by the courts over charges that he paid off many of the young women who attended his famous soirees in return for false testimony in the Ruby trial.
Also outstanding is a charge that he paid a senator €3 million ($4.0 million) in 2006 to join his party and destabilise a centre-left government. That case has come to court but is widely expected to time out under the statute of limitations later this year before any verdict is reached.