"We have presented a justice reform that is fundamental to us, in Italy we have almost a dictatorship of leftist judges," Berlusconi told the startled US leader through an interpreter after approaching Obama during a summit pause.
Obama got up from his seat and listened silently to Berlusconi's tirade, in an apparent snub.
The comments were broacast by Italian TV news channels and drew sharp criticism on Friday from members of Italy's judiciary and from centre-left opposition leaders.
"It is very serious that this has happened abroad and that a fundamental state institution should be denigrated even before one of the most powerful heads of state in the world," said the president of Italy's national magistrates association, Luca Palamara.
Berlusconi, a billionaire media tycoon turned politician is currently facing four criminal trials, three related to his business interests and one to charges of paying for sex with an underage prostitute and abuse of office.
He denies wrongdoing in all cases and claims he has long been the victim of persecution by leftwing judges who want to bring him down.