The former Juventus, Bayern Munich and Atletico Madrid forward has been without a club since leaving Qatari side Al-Duhail in the summer
The 34-year-old has been a free agent since leaving Qatari side Al-Duhail in the summer.
An agreement is now in place for Mandzukic to return to A league, with only the final details to work out before the move is made official.
The former Croatia striker, who retired from international duty after reaching the 2018 World Cup final, is expected in Milan on Monday to sign his contract.
While it will initially be a short-term deal until the end of the season, there will be the option to renew depending on how many appearances he makes before June.
Stefano Pioli has been keen to add reinforcement in attack despite Milan’s excellent first half of the season, which sees them three points clear of the top of Serie A – and seven clear of Juventus – with 17 games played.
Zlatan Ibrahimovic started the season in terrific form with 10 goals in six league appearances, but he missed eight games between November and January due to injury. Ibrahimovic made his comeback late in the 2-0 win over Torino last time out and is expected to play against Cagliari on Monday.
Sunday’s news that Hakan Calhanoglu is one of two Milan players to test positive for coronavirus has, nevertheless, intensified the need to add an extra body in attack.
— Goal (@goal) October 30, 2020
While Mandzukic may be short of match practice, he will bring a wealth of experience in attack and provide a welcome rotation option.
Mandzukic scored 44 goals in 162 games in four seasons at Juve, winning three Coppa Italia titles and one Supercoppa Italiana.
Juve reached the 2017 Champions League final with Mandzukic scoring a stunning overhead kick against Real Madrid in Cardiff, although the Spanish side eventually ran out 4-1 winners.