Vincenzo Montella, a former Roma footballer was sacked on Monday after The San Siro club were on Sunday held to a goalless draw at home against Torino, placing them seventh in the Serie A table despite their new Chinese owners spending big in the summer transfer.
AC Milan have won just twice in their last nine league matches and Sunday’s result was the fourth successive home league game without a goal.
In a statement posted on the club's official website, Milan said: "AC Milan announce to have parted ways with coach Vincenzo Montella. We are very grateful to Mr. Montella and his staff for all the work done up to today, their commitment and professionalism.
"Management of the first team is entrusted to Gennaro Gattuso, who leaves his position as Primavera coach and to whom AC Milan wish the best of luck.
"A press conference is scheduled for tomorrow to present the new coach at Milanello training centre."
Vincenzo Montella admitted leaving Milan was "very painful" but he said he would continue to support the club.
"Leaving Milan is very painful," Montella wrote on Instagram. "I tried to give all I have got for this club, but I accept the decision which has been taken. I would like to thank the players and you, the fans, for the beautiful moments we spent together, hoping that Milan will get back up there where they belong.
"I evidently failed, but I will keep on supporting these colours."
New coach, Gennaro Gattuso, a former midfielder who played for Milan between 1999 and 2013, winning two Serie A titles and the Champions League twice, was a key part of one of Milan's greatest ever teams.
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