Tomori will spend the rest of this season with the Serie A leader after finding first-team opportunities limited under Frank Lampard at the Blues.
Milan has an option to make the deal permanent, with the transfer fee in question – although not disclosed by either club – reported to be in the region of £25 million ($44.5 million).
The 23-year-old made his first-team breakthrough at Chelsea last season, having impressed on loan at Derby County throughout 2018-2019, when Lampard was in charge of the Championship club.
An England debut against Kosovo in November 2019 followed and, although his rapid rise has since been checked, the Chelsea head coach believes Tomori still has a very bright future.
"Fikayo is a developing player, a very good player," Lampard said ahead of Chelsea's FA Cup fourth-round match against Luton Town.
"I have seen him rise from his time at Derby as a good talent to one of the best defenders in the Championship and then an England international and a Chelsea regular.
"His journey has been great. He is going to be a top player, but he is a developing player, too."
Milan is three points ahead of Inter Milan at the Serie A summit as the season approaches the halfway point and hosts Atalanta on Sunday (AEDT).
Tomori is Milan's third signing of this window after the captures of midfielder Soualiho Meite on loan from Torino and experienced forward Mario Mandzukic on a free transfer.
He is also Chelsea's second loan departure after Danny Drinkwater's move to Kasimpasa of the Turkish Super Lig.