The 31-year-old's dramatic loss of form has also led to him being shelved from Brazil's plans for the 2014 World Cup after he was left out of the Confederations Cup squad this year.
Kaka has been plagued by injuries over the last few years, including one to his left knee shortly after the 2010 World Cup.
He made only 82 league appearances during his time at Real after his 65-million-euro ($85.71-million) move in 2009 and rarely played anything more than a supporting role.
Some 300 supporters were waiting for Kaka outside Linate airport on Monday.
"I'm very happy to be back," he told reporters. "After a difficult period at Madrid, I had been dreaming about a return. I'm not happy that I left in 2009 but these are things that happen in football.
"This is a young team with a lot of great players and I'm happy to have Robinho in the team," he added. "Physically, I'm fine, I haven't had any problems for a while and I want to play.
"I did everything I could for things to work out at Real Madrid and when I realised that there wasn't much space for me, I asked to leave."
He said he still believed that Milan could give him a springboard back to the Brazil squad in time for next year's World Cup.
"I think that Milan can help take me to the World Cup although I want to take one step at a time," said Kaka, who won a World Cup winner's medal with Brazil in 2002 when he was a reserve, and played at the 2006 and 2010 tournaments.
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