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The Gunners had identified Yanga-Mbiwa as a top target to shore up their defence after he played a key role in Montpellier's shock Ligue 1 title win last term.
The Rossoneri, meanwhile, had earmarked the France international as the perfect replacement for Thiago Silva, but failed to reach an agreement with his current club.
"Arsenal tried to sign me, but I had my attention elsewhere," Yanga-Mbiwa stated to L'Equipe.
"Milan wanted me, but even though my president was ready to sell me, the deal didn’t go through in the end.
"I was really disappointed about not joining Milan, but our president is the owner of the club and he must be respected.
"Milan made an offer but it was rejected. It was then I understood that it would be difficult for me to leave Montpellier."