The veteran Uruguay international has left the Italian giants after one troublesome season at San Siro and has penned a contract with the Brazilian club until 2015
The 33-year-old Uruguayan has signed a three-year deal with the Brazilian club after the Nerazzurri agreed to terminate his contract.
Forlan arrived at San Siro last summer as a replacement for Samuel Eto'o but failed to make his mark at the club, scoring just two goals in 22 appearances.
The former Atletico Madrid ace is still in Milan, but will fly into Porto Alegre on Saturday - the same day Internacional will take on Cruzeiro in the Brasileiro.
Brazilian sources claim that Forlan will earn around €2 million per annum at Colorado, which will make him one of the highest earners at the club.