Giampaolo, 51, put pen to paper after leaving fellow Serie A side Sampdoria on Saturday, with Milan holding the option to extend his contract by a further season.
The Swiss-born Italian guided Sampdoria to ninth in the last of his three seasons in charge and emerged as the leading option for Milan following Simone Inzaghi’s decision to sign a new deal at Lazio.
Giampaolo replaces Gennaro Gattuso, who stood down in the wake of Milan’s failure to secure Champions League qualification.
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