Earlier, reports from the United Arab Emirates, where Manchester City's owners are based, said that the deal for the player had collapsed following talks between the clubs this week.
"It has been well documented that we have expressed an interest in signing the player," Hughes told Sky Sports News on Thursday.
"I saw the reports and what has come out this morning is completely untrue."
Asked if the deal was still on, Hughes replied, "yes."
Media reports have said City, the richest club in the world after being taken over by the Abu Dhabi United Group, had bid 100 million euros ($132 million) for the 26-year-old, who won the Ballon D'Or and FIFA World Player of the Year award in 2007.
Kaka told Sport Mediaset on Wednesday he was happy at the San Siro.
"I want to grow old at Milan," he said. "My aim is to become the captain of this team. I have already turned down some big offers."
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