Ancelotti's job appeared in doubt after the Rossoneri's poor form left them way off the pace of league leaders and city rivals Internazionale in Serie A.
Milan have managed to recover to fifth in the table but are still 20 points adrift of Inter and four points behind Fiorentina, who occupy the last Champions League place.
The pressure on Ancelotti increased when Milan crashed out of the Champions League at the last-16 stage to Arsenal in March.
Former Chelsea boss Jose Mourinho was rumoured to be waiting in the wings to take over but Berlusconi, a staunch supporter of Ancelotti, partly attributed this season's troubles to the loss of striker Ronaldo to a serious knee injury and showed his support for the Italian coach.
"Ancelotti is part of the Milan family and he'll still be here next year," Berlusconi told Italian radio station Radio Radio.
"We had some bad luck with Ronaldo's injury as the whole squad was built around having him as our frontman with (Alexandre) Pato just behind him alongside the fantastic Kaka."
"After some great wins we had a bad spot caused by the incident with Ronaldo and that touch of misfortune."
Ancelotti, who has guided Milan to the Scudetto, the Coppa Italia and two Champions League titles, signed a contract extension in May last year which keeps him at the club until 2010.
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