The deal signifies the biggest Chinese investment in a European club, after Suning Commerce Group’s purchase of rival Internazionale FC last year.
The Serie A club have been owned by former Italy Prime Minister Silvio Berlusconi since 1986.
Under Berlusconi Milan won 29 trophies in 31 years.
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However, Milan have not won Serie A since 2011 and finished seventh, 10th and eighth in the last three seasons.
They are currently sixth in the league, 20 points behind leaders Juventus.
In a joint statement, Berlusconi’s holding Fininvest said it had sold its entire 99.93 percent stake in the club to Luxembourg-based Rossoneri Sport Investment Lux, a company controlled by investor Yonghong Li which replaced the original Chinese bid vehicle.
The buyers, who paid a final tranche of 370 million euros on Thursday, committed to a significant recapitalisation and financial strengthening of the club, the statement said.