Despite reports in the past linking the 34-year-old with moves to Chelsea and Tottenham Hotspur, the former Manchester United and Real Madrid wide-man had publicly stated his preference to return to the Italian side, in order to maintain his fitness levels during the Major League Soccer off-season.
The 34-year-old midfielder will stay in Italy from January to June before returning to Galaxy and Major League Soccer.
England boss Fabio Capello had warned Beckham that his chances of playing in next summer's World Cup finals in South Africa would disappear if he did not secure a loan move to a European club in the New Year.
"I need to give myself the best chance possible to make the World Cup squad and playing for Milan on loan will help me to do that," Beckham said in a statement.
"I genuinely enjoyed my time at Milan and I look forward to meeting the players and staff again. I'm committed to LA Galaxy and MLS in the long term and remain as passionate as ever about growing the game of soccer in America."
The former England captain has mainly been used as a substitute by Capello, who was not prepared to consider the country's most capped outfield player if he was out of action during MLS's long close season from November to March.
His second loan, the financial details of which have not been released, has been in the pipeline for months despite reports some English Premier League clubs were interested.
"We are very happy to re-see David Beckham in the red and black shirt after the splendid experience of last season," Milan chief executive Adriano Galliani said in the statement.
"We are sure that this period in Europe will help the player to take part in the next World Cup and then to continue his career at Los Angeles Galaxy, whom we thank for their help."
MLS PLAYOFFS
Beckham upset Galaxy fans and officials last season when he decided to stay in Italy until the end of the campaign rather than return to Los Angeles in March under the original deal.
He missed the start of the MLS season and when he returned to Galaxy in July, one of the world's most famous players was booed by his own fans in a friendly ironically against Milan.
His relationship with Galaxy fans has improved however, after he helped the team win their MLS division last month and qualify for the playoffs.
Galaxy officials also made it clear that as long as Beckham again returned to the U.S to complete his deal until 2012, they would assist him in finding another loan to Europe.
"We are pleased to finalise David's loan to AC Milan and we look forward to his return to the Galaxy after the 2010 World Cup," Galaxy head coach and general manager Bruce Arena said.
Beckham impressed early in his first spell at the San Siro, providing some much needed crosses to the stuttering Serie A side, but his form faded towards the end of last season.
Much has changed at Milan since May, with coach Carlo Ancelotti heading to Chelsea and being replaced by Leonardo.
The Rossoneri had a dreadful start to this season but their campaign has recently been re-ignited.
Leonardo has welcomed Beckham's
