The 21-year-old has been linked with a host of European sides, with Paris Saint-Germain believed to have been leading the race for his signature, while Champions League finalists Liverpool and Barcelona were also keen on him.
However, according to a Globoesporte report, a deal was reached overnight on Tuesday between the Rossoneri and Flamengo for the player to join Milan in January in a transfer worth €35m plus bonuses.
Paqueta recently received his first call up for the Brazil national team and has been an impressive performer at club level since making his debut in 2016 as a teenager.
Leonardo made the decisive swoop for his compatriot overnight on Tuesday and negotiations have now been completed, with the player expected to undergo medical examinations this week ahead of his anticipated January arrival.
Within the Rossoneri hierarchy, the believe that the midfielder possesses all of the tools to become the new Kaka.