The 29-year-old spent five years at the Serie A giants but left at the end of his contract, turning down teams from Germany and Italy before he rejoined the Gunners in August and came off the bench to make his debut in the Gunners' 1-0 derby win over Tottenham.
"Milan asked me to extend my contract for two years," he told France Football. "However, at 29 years old, I didn't want to sign for anything less than three seasons. I had other opportunities in Italy where clubs other than Milan contacted me, as well as from sides in Germany and England.
|13/2||Mathieu Flamini is 13/2 with PaddyPower to score anytime in Sunderland v Arsenal
Flamini is delighted to link up with Arsene Wenger once again, with the chance to work with his former boss again playing a key role in his choice.
"The fact that Arsene Wenger is still at the club was an important part of my decision; he knows me very well and has played a big role in my career," the midfielder added.
"He introduced me to the best league, the Premier League, and has taught me on many levels, tactical, technical and mental.
"We have the means to participate in the title race, even if we are outsiders. I wish to write a beautiful new story with Arsenal."