Van Bommel joins a queue of departing veteran stars including Alessandro Nesta, Filipo Inzaghi and Gennaro Gattuso, who will also leave the San Siro this summer.
Despite only joining the club in January last year, Van Bommel admitted his sadness at leaving Milan, saying he had decided to return to Holland for family reasons.
"I'm leaving Milan. I was only here a year and a half so for me it's easier to say goodbye than players like Gattuso, Nesta and Inzaghi," the 35-year-old told Milan's official TV channel.
"That's the way life is - the time comes when you have to leave. When I arrived here, everyone told me this club is like a family and it's true, it is."
Van Bommel claimed he was set to sign a one-year deal with PSV, where he played for seven seasons before joining Barcelona in 2005.
"I will go back to Holland and I will play for PSV," he added.
"Maybe one day I'll return here (Milan) as a coach."
Van Bommel, who joined Milan from Bayern Munich, has won league titles in four different countries during his career, while he also lifted the 2006 Champions League with Barca.
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