Berlusconi, a media magnate, has dismissed the accusations as a "joke" and the demonstration as a "farce." He said this week that there is more press freedom in Italy than in any other Western country.
Berlusconi owns the country's largest private broadcaster. As premier, he and his conservative coalition have indirect control on the state-run broadcaster RAI.
The premier has recently sued two leftist newspapers over their coverage of a sex scandal that has been engulfing him. He has said during an appearance on RAI that there are "too many scoundrels" in the media.
Many at the rally in a packed Piazza del Popolo in central Rome wore T-shirts saying, "Now sue me, too!"
The demonstration was organized by the journalist union, and it drew several members of the center-left opposition.
Berlusconi's critics say he wants to intimidate journalists and manipulate coverage.
Media rights group Reporters Without Borders, which was taking part in the rally, issued a statement this week urging Berlusconi "to put a stop to his attacks and lawsuits against the press" and expressing "support for the media the Italian leader has targeted."
"I have yet to hear a real and concrete reason that justifies all this alarm," replied Berlusconi's spokesman Paolo Bonaiuti.
Italian newspapers have been filled with details of the premier's sex scandal, which emerged last spring when Berlusconi's wife announced she was divorcing him, citing his fondness for younger women.