The 22-year-old joined the Flying Donkeys last summer and scored five goals in 32 Serie A appearances.
A statement from Chievo read: "Beautiful news for Chievo.
"Alberto Paloschi will wear the Gialloblu colours in the 2012-13 campaign."
Paloschi broke into Milan's senior team in the 2007-08 season but spent the next three years at Parma and Genoa.
The Italian forward will become a free agent next summer.