The former Barcelona wideman has failed to establish himself under Toffees boss Ronald Koeman and moves to the San Siro until the end of the campaign.
AC Milan have completed the signing of Everton winger Gerard Deulofeu on loan until the end of the season.
The Spain winger moved to Goodison Park on a permanent deal in 2015 having impressed on loan on Merseyside during the 2013-14 campaign.
Defulofeu has struggled for game time under Ronald Koeman this term, though, and has just four Premier League starts to his name.
Milan were soon credited with an interest in his services in the January transfer window, but the move was thought to have stalled over the Serie A club's reluctance to pay a loan fee.
Deulofeu came through the youth ranks at LaLiga giants Barcelona, but struggled to break into the first team at Camp Nou and spent time on loan at Sevilla in the 2014-15 campaign.
Milan announced the signing of the 22-year-old after confirming their squad for Saturday's Serie A encounter against fellow high-flyers Napoli at San Siro, with Deulofeu not included.
Vincenzo Montella's men are fifth in the table, four points adrift of third-place Napoli but with a game in hand over three of the four teams above them.