The Manchester City striker has been back in his native Italy for the birth of his daughter ahead of Sunday's derby with Manchester United.
The Rossoneri were said to be keen to bring the Italy international back to his homeland, according to media reports.
However, Berlusconi has moved quickly to deny the speculation, telling Sky Sport Italia: "My words have been misinterpreted. I do not dream about Balotelli at night.
"There are no negotiations going on because he will cost too much and we cannot afford him."
The 22-year-old has also been linked with a move back to his former club Inter Milan as well as champions Juventus, although City have always insisted he is not for sale.