After protracted negotiations the deal was thrashed out between Internacional officials, representatives of Milan and the player's agent Gilmar Veloz.
"Everything has been arranged very quickly and Pato will travel this Friday to Italy to join up with his new team," said Veloz.
"Internacional tried to keep Pato in Porto Alegre until the ending of the Brasileirao (Brazilian championship), but the Italians want him with them at once so they had to accept."
European champions Milan stated that Pato, who has only 25 senior games under his belt, will be able to play in Serie A and Champions League matches from January.
"The highly-talented Alexandre Pato will train with Milan and will be able to play friendly matches from September 3rd, 2007," added Veloz.
"From January 2008 he will be eligible for competitive games."
In the current Brasileirao, Pato has scored four goals in six games. At a young age he has transformed into one of the most important players at Internacional, winning the World Club Championship and the Recopa Sudamericana.