The 27-year-old underwent a medical in Milan on Thursday morning and is set to join the Italian side on an initial loan deal.
Milan will have an option to make the move permanent if the former Roma playmaker makes at least 25 appearances this season.
"I am delighted to have arrived here," said Aquilani. "This is a leap in my career.
"I have come to Milan to do well.
"I have different characteristics to (former AC Milan midfielder) Andrea Pirlo but this is a further responsibility for me.
"I believe I can play in all positions in midfield.
"The clause of making at least 25 appearances? It's not a problem for me and I'm not thinking about it.
"I will do everything possible to earn the trust of the club."
Aquilani, who spent last season on loan at Juventus before returning to Anfield earlier this summer, is under contract with Liverpool until June 2014.