The 25-year-old scored 19 goals this season and helped the Rossoblu to a 10th-place finish in Serie A.
Genoa bought 50 per cent of Borriello's contract from Milan last summer, but the Rossoneri have paid £7m to buy it back.
Milan have also thrown in youngster Davide Di Gennaro to sweeten the deal, but Borriello will be difficult to replace.
"I am sorry to lose him," said Preziosi. "But Milan offered him £2.3m a season, which is far more than we could give him."
Borriello came through the youth ranks at Milan, but never made an impact with the first team.
The Neapolitan was shipped out on loan to six different clubs before joining Genoa.
Source: C4 Football Italia
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