The Brazilian international had been expected to sign for the Ligue 1 leaders in the coming days but he has now claimed that he will be remaining at San Siro
It had been claimed that the Italian champions had accepted a €35 million bid from the Ligue 1 outfit for the Brazil international, who was recently rumoured to have had a falling out with Rossoneri coach Massimiliano Allegri.
However, Pato stated on his current club's official website on Thursday afternoon that he has no intention of leaving.
"Milan is my home," the 22-year-old striker stated. "I did not want to interrupt my career with the Rossoneri after winning my first two trophies with this shirt.
"I want to contribute to the history of Milan and to the future success of this club with joy and in perfect harmony with everything around me.
"This joy will give me the energy to face the future matches with more enthusiasm and a greater desire to win and to score.
"Today is a special day for me. I thank president [Silvio] Berlusconi, the club and fans, who have always believed in me."
Pato's revelation has come as a surprise, with PSG sporting director Leonardo having spoken optimistically about signing his compatriot earlier in the day.
"On Pato, things are moving forward," he claimed during a press conference heralding the arrival of Maxwell from Barcelona.
"There are some possibilities but we don't have an agreement yet."
According to Sky Sport Italia, who allegedly spoke with Milan CEO Adriano Galliani off the record, the Rossoneri had indeed agreed to sell Pato to PSG and that his decision to remain at San Siro has prompted the club to end their pursuit of Manchester City's Carlos Tevez.
It had been reported earlier in the day that Tevez was set to join Milan, with Galliani said to have matched Inter's bid for the Argentine forward during a meeting with City officials in London on Thursday afternoon.
Pato, who has been capped 18 times by his country, has scored 51 goals in 111 games for Milan since arriving from Internacional in 2007.