Despite a strong Milan start, La Dea were in complete control and went ahead in the first half through Cristian Romero’s stooping header from a corner, as they dominated against the league leaders.
Early in the second half Franck Kessie caught Ilicic in the face with a stray elbow to concede a penalty against his former club, and the Slovenian made no mistake from the spot. Atalanta showed no signs of letting up and after hitting the post, Duvan Zapata added gloss to the scoreline with a late strike to complete the rout.
Milan came flying out of the blocks and Zlatan Ibrahimovic dragged an early chance wide, before having the ball stolen from his toes as he looked to tap in. With barely three minutes gone the Rossoneri had seen another excellent chance squandered when Soualiho Meite headed over from a corner.
At the other end, Ilicic tested Gianluigi Donnrumma from a freekick and Marten De Roon blazed over from the edge of the box, as Atalanta began to dominate.
The visitors almost caught Milan out with a quick counterattack as Ilicic lofted the ball up for Hans Hateboer, and his half-volley clipped Pierre Kalulu before spinning into the side-netting.
The deadlock was broken midway through the first half as Atalanta forced their way ahead with a stooping Romero header. The centre-back met Robin Gosens’ cross from a short corner to nod under Donnarumma and give his side a deserved lead.
Ilicic was pulling the strings and his quick feet earned a dangerous freekick on the edge of the box. The Slovenian’s thunderous strike from the set piece forced a good low stop.
Milan ought to have levelled before the break as Ibrahimovic lost his man at the back post from a deep free-kick, but the striker’s effort was off target.
Within minutes of the restart Atalanta doubled their advantage from the penalty spot to deliver a deadly blow to Milan. Ilicic was caught in the face by a stray Kessie arm in the box and after stepped up to blast into the bottom corner from the spot, despite Donnarumma diving the right way.
The Orobici were rampant and Zapata saw a diving header whistle inches over the bar on the hour mark and Ilicic weaved his way through the defence but dragged his shot wide.
At the other end, Rafael Toloi was required to hook a goalbound effort clear, whilst new signing Mario Mandzukic almost made an immediate impact with his first Milan touch after coming off the bench, seeing a low strike blocked in the box.
Moments after powering a header against the post from a corner, Zapata added his name to the scoresheet as he latched onto Romero’s through ball from a counter attack to tuck home and seal victory.
Despite the heavy defeat, Milan retain top spot in Serie A at the midway point courtesy of Inter’s goalless draw against Udinese. Atalanta, meanwhile, move into fourth and are just seven points off the Rossoneri.