Mr Berlusconi's Forza Italia won 16 of 22 cities with the anti-immigration Northern League and another party.
The results were a setback for Matteo Renzi, the former centre-left prime minister seeking to return to power as head of the Democratic Party (PD).
"It could have gone better," he admitted in a social media post.
The PD currently heads a coalition led by Paolo Gentiloni, who took over after Mr Renzi lost a referendum on electoral reform in December 2016.
The biggest defeats for the PD were in party strongholds such as Genoa, La Spezia and L'Aquila. The centre-right also won in other provincial capitals including Monza, Piacenza and Pistoia.
Mr Berlusconi, 80, will now set his sights on the next general election, which is due in 2018 but may take place earlier.
Silvio Berlusconi may hope that 80 is the new 40. The gains made by his Forza Italia party in local elections allow him to claim the start of yet another political comeback.
"From these results the centre-right can set on a path to go back to ruling the country," he said in a statement.
But there is a major road-block in the way of his return for a fourth time as prime minister: he is currently banned from holding political office.
The ban, imposed following a 2013 conviction for tax fraud, doesn't expire until 2019. Unless he wins an early appeal at the European Court of Human Rights, Mr Berlusconi won't be able to run in Italy's 2018 general election.
Mr Berlusconi founded Forza Italia in 1993 and became prime minister the following year, with the Northern League as part of his coalition government.
Out of office in 1994, he then returned for a five-year period in 2001 and again in 2008 for three more years.
His political career has been overshadowed by his legal battles, which culminated in a community service sentence for tax fraud.
While Forza Italia's election advances were dramatic, commentators pointed to the low turnout of 46% and the first-past-the-post system in local elections. National polls are based on proportional representation.
The ex-prime minister said he would now seek a moderate, liberal coalition drawn from Christian roots. However, one of the parties in his alliance is the far-right Brothers of Italy.
Beppe Grillo's Five Star party fared poorly in the two-round vote, a year after it won control of Rome and Turin. Mr Grillo put a brave face on the result, pointing to victories in eight mayor races.

Saturday Night Takeaway and I'm a Celebrity Get Me Out Of Here have both been nominated for Best Entertainment Programme.
If they win, it will be the presenters 13th consecutive National TV Award.
The Voice will go up against Strictly and The X Factor in the Best Talent Show category.
The winners will be revealed on the 22nd of January.
Italy's centre-right ex-prime minister Silvio Berlusconi is celebrating local election success in an alliance with two right-wing parties.
[NEXT_CONCEPT]
Ant and Dec are in competition with themselves at this year's National Television Awards.