Matri, 29, joined Juventus from Cagliari in 2011 and helped Antonio Conte's men to win two of their last three Serie A titles.
However, Matri made just 19 starts for Juventus in all competitions last season, although he still managed to score 10 goals.
Juventus have brought in Carlos Tevez and Fernando Llorente in the transfer window to add to a forward line that already boasted the likes of Mirko Vucinic and Sebastian Giovinco.
Those deals shoved Matri further down the pecking order in Turin and he will now attempt to secure a place in the Milan starting XI after returning to the club where he started his professional career.
"It's a great feeling to come back to where you played as a boy," Matri told the club's official website.
"I know a lot of people here and the coach is someone I’ve worked with.
"There are many positive aspects. I spoke to Allegri and it’s up to me to get a place on the starting line-up but I’m ready to play.
"There was some interest from other clubs but as soon as Milan came in for me, I only wanted to come here. It was an objective for me and now it'll be a great starting point."
