A 2-1 defeat to Juventus intensified speculation over Mihajlovic's future, following expectations that he would not leave until the end of 2015-16.
The Serbian wrote on his Twitter account on Monday night: "Thanks for all the love. It was an honour."
A statement released on Milan's official website on Tuesday morning read: "Sinisa Mihajlovic has been relieved of his role as AC Milan coach. The club would like to thank Mihajlovic for the dedication and hard work carried out this season.
"Cristian Brocchi will now be in charge of the first team until the end of the season. AC Milan would like to welcome Mr Brocchi and wish him all the best."
Berlusconi reportedly dined with his general manager Adriano Galliani and the coach of Milan's youth team Brocchi.
Brocchi was due to lead his first training session on Tuesday afternoon, in preparation for the trip to Mihajlovic's former club Sampdoria.
Berlusconi recently declared that the Coppa Italia final against Juve on May 21 would determine the Serbian coach's destiny, although recent league results mean they are at risk of failing to qualify for Europe next season without winning that fixture in Rome.
The Rossoneri are currently sixth in the Serie A standings, but their advantage over seventh-placed Sassuolo is just one point while Lazio are just three points further behind.
Should Milan fail to win the Coppa Italia, sixth place would be rewarded with a place in the Europa League and, after two years without European football, Milan are desperate to return next term.
Brocchi was close to taking charge last season, when Berlusconi started to run out of patience with Filippo Inzaghi.
However, he stood by Inzaghi until the end of the season, with Milan just missing out on qualification for the Europa League.
Brocchi, 40, has successfully guided Milan's youth team to 28 points out of a possible 30 in the second half of the season, taking them ahead of city rivals Inter Milan at the top of the standings.
His appointment could see some homegrown youth players promoted to the first team, which Berlusconi expressed as one of his biggest wishes last summer.
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