The 27-year-old scored only seven goals in 29 La Liga appearances last season, frustrating fans with a lack of killer instinct in front of goal.
Under new coach Pablo Machin, Muriel played just six times in La Liga this term, with Wissam Ben Yedder and Andre Silva the preferred options in attack.
Milan had been touted as favourites to sign Muriel as they look to bolster their attacking options, but Fiorentina ultimately managed to get the deal over the line.
Muriel joins the club initially on loan, but they retain the right to purchase him – reportedly for €13m – at the end of the season.
Fiorentina will be his fourth Italian club after previous spells at Lecce, Udinese and Sampdoria.