The Brazilian forward was closing in on a move to Paris Saint-Germain earlier this week before the deal collapsed.
Despite Pato's claims that he wanted to stay with Milan, Berlusconi has said that he had the final say.
"I have decided to keep Pato because he's a great talent," Berlusconi told Goal.com Italy.
"I was not convinced by the operation from the financial and technical point of view. I made this decision by myself."
AC Milan take on local rivals Inter in Serie A on Sunday evening.