Last season's runners-up Manchester United will also face familiar foes in the shape of Benfica, while Barca's domestic rivals Real Madrid are in a group with fellow former champions Olympique Marseille.
NEWS:Dates for all group stage fixtures
Barca and Milan, who have been European champions 11 times between them and met in the 1994 final with the Italians winning 4-0, will renew their rivalry at the Nou Camp on September 13.
Both should qualify from a Group H which also includes outsiders BATE Borisov of Belarus and Czech champions Viktoria Plzen.
"We know Milan so well and have played so many times and the group is a tough one," former Barca goalkeeper and now technical director Andoni Zubizarreta told reporters.
"Zlatan Ibrahimovic will enjoy coming back to the Nou Camp with Milan to show us what we are missing - but we cannot under-estimate the other two sides either. We don't know a lot about them and that is always a dangerous thing."
Manchester United, beaten by Barca in May's final, were first of the 32 teams out of the hat and drawn with Benfica, the team they beat in the final to win their first European Cup in 1968, Basel and Romanian debutants Otelul Galati.
Benfica's name was drawn out by United great Bobby Charlton, who scored against Benfica in the 1968 final.
"We have a long friendship with Benfica and Eusebio and Sir Bobby are great friends," United Chief Executive David Gill said.
"We have played Benfica in the Champions League recently and lost to them but it is always special when they come to Old Trafford."
Gill's club travel to the Stadium of Light in Lisbon for the opening match on Sept. 14 with the return in Manchester on November 22.
Manchester City, the world's richest club thanks to owner Sheikh Mansour of Abu Dhabi and playing in the Champions League for the first time, were drawn with four-times European Cup winners Bayern Munich, Villarreal and Napoli.
'TOUGHEST GROUP'
New boy Sergio Aguero, City's record 38 million pounds signing, faces a trip to Napoli, the former club of father-in-law Diego Maradona.
"This is the toughest group of the whole draw," Bayern coach Jupp Heynckes told his club's website. "I know Villarreal and Napoli and they are absolute top teams.
"As for Manchester City... they have boosted their squad and are desperate for European success. We will be challenged in every single game and have to be fully focused."
City official Brian Marwood said: "Any two of the four can go through and it's going to be tough. But our coach [Roberto Mancini] will know all about Napoli from his days in Italy."
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