The flamboyant 77-year-old media magnate will have to work at the centre "one day a week and for not less than four hours", Milan judge Pasquale Nobile De Santis said in his ruling published by Italian media.
The ANSA news agency identified the centre as the Fondazione Sacra Famiglia -- a Church-run centre for disabled and elderly people with 2,000 patients in Cesano Boscone, a southwestern outskirt of Milan.
The court in Milan said Berlusconi would have to stay in the Lombardy region most of the week but would be granted special dispensation to travel to Rome between Tuesdays and Thursdays for political engagements.
He will have to respect a curfew and be back home on Thursdays in his villa near Milan by 11pm.
Berlusconi will also now be banned from meeting other people with criminal convictions, which includes at least one of his close associates.
The ruling did not say when the community service would start but reports said it could be within days.
Berlusconi was at his residence in Rome on Tuesday and meeting with his lawyers, Italian media reported.
Berlusconi has been expelled from parliament and is barred from running in an election for six years but is still the leader of Italy's main centre-right party, Forza Italia (Go Italy) and a major political player.
The ruling is certain to ease the veteran politician's concern about campaigning for European Parliament elections next month.
The court was deciding between granting him community service or placing him under house arrest, which would have severely limited his movements.
Berlusconi's lawyers Niccolo Ghedini and Franco Coppi welcomed the ruling as "balanced and satisfactory relating to the requirements of his political activity".
But Daniele Capezzone, a lawmaker from Forza Italia, said it was still "a blow for democracy".
Berlusconi was sentenced last year in the case, which relates to the purchase of television distribution rights by his Mediaset business empire in the 1990s.
He was spared prison time because of leniency in Italy for convicted over-70s and the sentence could be further cut for good behaviour to nine months.
Berlusconi claims total innocence of any crime he has ever been charged with and regularly accuses a large part of the Italian judiciary of plotting to exclude him from politics because of an alleged leftist bias.
He is currently involved in two other court cases. In a trial set to start on June 20, he will appeal a seven-year prison sentence and lifetime ban from parliament for having sex with an underage 17-year-old prostitute and abusing his official powers.
He is also a defendant in a trial for allegedly paying a three-million euro ($4 million) bribe to get a centre-left senator to join his party in 2006 in a move that helped bring down a rival government.
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