ESPN reported Thursday that Musah was set to undergo a medical in Milan on Friday after a deal was reached between the clubs. Valencia confirmed in their announcement that Musah has moved for a fee of €20 million ($21.9m) plus add-ons.
Musah becomes the second U.S. international to sign for Milan this summer after Christian Pulisic joined from Chelsea. Milan is controlled by the American investment firm RedBird Capital Partners led by Gerry Cardinale, and baseball's New York Yankees are a minority investor.
Milan announced that Musah will wear No. 80 on his jersey at the San Siro.
The New York-born player holds an Italian passport having spent part of his upbringing in the northern Italian town of Castelfranco Veneto, Treviso, meaning he will not take up one of the non-EU slots on Milan's roster.
At club level, Musah spent four years at Valencia after joining from Arsenal's academy. During that time he established himself as a first-team regular, able to play both in the center of midfield and in a wide position.
He made 37 appearances across all competitions Valencia last season and helped the club avoid relegation.
Information from the Associated Press was used in this report.