The teenage striker formalises his switch to the Rossoneri, having penned a three-year deal, and looks set to be the first in a series of forwards arriving at San Siro imminently
The 17-year-old has agreed terms over a three-year contract with Massimiliano Allegri's side, and is expected to be thrown straight into the first team, despite his tender age.
The striker, who is of Senegalese origin, spent time on trial with the Gunners earlier this summer, with Arsene Wenger subsequently seeing a transfer bid rejected by the Ligue 2 side.
A statement on Caen's official website read: "Caen would like to thank M'Baye Niang for what he brought to the club over the course of the past four years.
"The young striker today [Tuesday] signed a three-year contract with AC Milan.
"Caen wish him every success with his new club and in his personal life."
Niang, a France youth international, made his professional debut in April 2011 and went on to make 30 Ligue 1 appearances for Caen, scoring five times.
Milan are likely to follow up the signing of Niang, if reports are to be believed, with those of Bojan Krkic and Nicklas Bendtner, as the club strive to plug the gap left by Zlatan Ibrahimovic.