The 22-year-old winger will spend the next year at the San Siro as he looks to make an impact in Serie A and continue his development at one of Europe's biggest clubs.
Hutchinson began his career in Arsenal's academy before joining Chelsea in 2022. He made two first-team appearances for the Blues before moving to Ipswich Town on loan.
His performances at Ipswich eventually earned him a permanent move, and he later joined Nottingham Forest last year.
The England youth international made 42 appearances in all competitions for Forest last season, scoring once and providing eight assists.
Hutchinson now becomes the latest new arrival at Milan as former Manchester United manager Ruben Amorim continues to reshape his squad.
The Italian club have been active in the transfer market, with Goncalo Ramos arriving from Paris Saint-Germain and Diego Moreira joining from Strasbourg as part of their summer recruitment.
