Those unable to follow the ceremony inside the Duomo on Monday watched Pope Benedict XVI's representative, Cardinal Angelo Comastri, read out a papal message that was beamed onto two giant screens.
The head of the Catholic church praised Martini as "generous and faithful", and said he had shown "an open mind, never refusing encounters and dialogue".
He was "attentive in all situations, close, lovingly, to those who were at a loss, poor or suffering", said the Pope.
Italian Prime Minister Mario Monti and a large number of political leaders attended the funeral.
About 200,000 mourners had flocked to the Gothic cathedral since Saturday to pay their final respects to the former archbishop of Milan, who warned in an interview published posthumously that the church was "200 years behind".
Martini, who commanded widespread respect and advocated reform on issues such as contraception and women in the Church, died aged 85 on Friday after battling Parkinson's disease for about 15 years.
In his last interview, conducted by a fellow Jesuit in early August and published in the Corriere della Sera newspaper on Saturday, Martini asked: "The church has been left 200 years behind. Why doesn't it rouse itself? Are we afraid?"
Martini, who had been tipped as a possible future pope after the death of Benedict XVI's predecessor, John Paul II, in 2005, never tired of his quest to modernise the staunchly traditional institution, openly questioning the church on contentious issues such as the clerical sex-abuse scandal and divorce.
But his progressive stance on highly sensitive issues, which ruffled feathers in some quarters of the church despite his diplomatic and measured approach, meant his chances of being elected to Saint Peter's Chair were slim.