23-year-old Fikayo Tomori will be with the Rossoneri until the end of the season, Chelsea announced on Friday night.
Milan are said to have retained an option to buy Tomori for £25million in the summer following the loan.
Thiago Silva's summer arrival at Chelsea has pushed Tomori further down the pecking order at Stamford Bridge, with Kurt Kurtuma, Toni Rüdiger and Andreas Christensen also ahead of him.
The Canada-born defender opted to stay and fight for a first-team place before the start of the campaign, but has now grasped the chance of a big loan move to Italy.
Title-chasing Milan will offer Tomori an opportunity to assert his top-level credentials, and he will wear the No 23 shirt at the club.
Despite his temporary departure from west London, boss Frank Lampard has insisted that Tomori still has a 'long-term future' with the Blues.
Chelsea confirmed in a statement as cited by Sports Central: 'Fikayo Tomori will spend the rest of this season on loan with Serie A leaders AC Milan. 'The academy graduate will continue his development at the San Siro having been with Chelsea since under-eights level. 'He has made 27 appearances for the Blues so far, including four this season, most recently as a substitute in the FA Cup third round win over Morecambe earlier this month.
Tomori impressed on loan at Derby under then Rams boss Lampard in the 2018-19 campaign.
Lampard then ushered the talented defender into the Chelsea first team after taking the helm for last season.
Tomori slipped out of the starting line-up for the second half of last term though, and has so far been unable to force his way back into regular first-team action..