The 48-year-old, who won 55 caps for Brazil, played for the Italian Serie A side from 1997 to 2001, winning the league title and Coppa Italia.

He returned to the club in 2009 as manager, replacing Carlo Ancelotti, but lasted only one season.

AC Milan said Leonardo's appointment will help achieve "greater success on the field".

Under current manager Gennaro Gattuso, they finished sixth in the league last season to qualify for the Europa League and had their one-year ban from European football overturned on appeal.

They were recently taken over by hedge fund Elliot Management, after former owner Li Yonghong failed to repay a debt to the American company.