The court also ordered a further judicial review on whether he should be banned from holding public office.
In an emotional video statement, Berlusconi denounced the decision as “based on nothing, and which deprives me of my freedom and political rights”.
The sentence cannot be appealed against further but Berlusconi, 76, is unlikely to go to jail because of his age.
The ruling by Rome’s Court of Cassation came after a three-day hearing. Berlusconi was not in court.
The former prime minister was sentenced to four years in prison at the conclusion of the trial in October last year, though this was automatically reduced to a year under a 2006 pardon law.
Berlusconi is likely to serve house arrest or carry out community service.
His lawyers described Thursday’s ruling as “unjust”.
They had been hoping to overturn his conviction in a case involving television rights bought by his company Mediaset.
It is the billionaire businessman’s first definitive conviction after decades of criminal prosecutions.
In his video message following the court’s decision he said: “I never devised any system of fiscal fraud. No false invoice exists in the history of Mediaset.”
Berlusconi said he was the victim of “an incredible series of accusations and trials that had nothing to do with reality”.
He described the more that 50 court cases he has faced as “genuine judicial harassment that is unmatched in the civilised world”.
Still in senate
The review of the lower court’s five year ban on holding public office means Berlusconi can remain as a senator and as leader of his centre-right People of Freedom Party (PDL) for now.
The BBC’s Alan Johnston in Rome says the former prime minister will be relieved that judges ordered a review of the political ban.
Berlusconi’s political grouping forms part of Italy’s coalition government. Prime Minister Enrico Letta needs both the PDL and his own centre-left Democratic Party to govern.
In a statement after the court ruling, Mr Letta urged “a climate of serenity” for the good of the country.
Italian President Giorgio Napolitano also urged the country to stay calm.
“The country needs to rediscover serenity and cohesion on vitally important institutional matters which have for too long seen it divided and unable to enact reforms,” he said.
A former minister and ally of Berlusconi, Nitto Palma, told Reuters on leaving a PDL meeting that there was a lot of bitterness about the verdict.
However the sentence would not affect the Letta government, he said.
Berlusconi’s legal team said there were “solid reasons” why Berlusconi should have been acquitted, and it would “evaluate and pursue any useful initiative, also in Europe, to make sure that this unjust sentence is radically reformed”.
Anti-establishment politician Beppe Grillo welcomed the court ruling, comparing the sentence to the fall of the Berlin Wall.
In a statement on his blog, Mr Grillo said Berlusconi had “polluted, corrupted and paralyzed Italian politics for 21 years”.
The original ruling in October 2012 found that Berlusconi’s Mediaset media empire had inflated the price it had paid for film distribution rights to avoid paying taxes.
He was labelled the “author of a whole system of tax fraud”.
The three-time prime minister and senator has faced a string of trials since leaving office in November 2011.
Appeals are pending in other cases in which he was convicted of having paid for sex with an under-age prostitute, and arranging for a police wiretap to be leaked and published in a newspaper.
Two other alleged tax evasion cases, one of them involving British lawyer David Mills, expired under the statute of limitations.
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