Milan will then have the option to make the deal permanent at the end of the campaign.
Higuain enjoyed a successful two seasons in Turin, winning the Scudetto twice, scoring 40 league goals and securing a place in his country's World Cup squad.
But the 30-year-old looks to have been made surplus to requirements by the arrival of Cristiano Ronaldo as the Bianconeri's new spearhead.
The ex-Napoli man is expected to be joined at the Rossoneri by Juve team-mate Mattia Caldara, as the two Italian giants negotiate a stunning triple transfer.
Caldara is set to move to Milan as part of a straight swap deal with the Bianconeri that will see Italy international Leonardo Bonucci rejoin his former club, just weeks after completing a move to Turin from Atalanta.