Milan are desperate for a cut-price but big-name forward after selling Mario Balotelli to Liverpool while Chelsea have new frontman Diego Costa and returning old favourite Didier Drogba ahead of Torres in their pecking order.
Torres, 30, has had a largely forgettable time at Stamford Bridge since moving from Liverpool for 50 million pounds ($82.8 million) in 2011 but did help the Londoners win the Champions League the following year.
The pace and guile which electrified fans of boyhood club Atletico Madrid and supporters during his early years at Liverpool have long gone with his attempts to bulk up and become Chelsea's "new Drogba" doomed to failure.
Fallen giants Milan, who finished eighth in Serie A last term amid a series of cost-cutting measures from the previously cash-splashing Silvio Berlusconi, have offered Torres a less than glamorous way out as the striker mulls cutting his losses.
"AC Milan and Chelsea have reached an agreement for the two-year loan of Fernando Torres," a statement from the Serie A side said.
"The transfer is now subject to Torres agreeing terms with AC Milan and passing the medical tests."
The 2010 World Cup winner signed a 5-1/2-year deal when joining Chelsea, meaning that his contract will be up in two years and Jose Mourinho's side will write off a substantial amount of money if he chooses to go to Milan on loan.
He is highly likely to agree terms with Milan given Chelsea have made clear he is surplus to requirements by accepting the Italian's side loan offer.
Mourinho may decide he already has enough firepower with winger Andre Schuerrle also capable of playing up top but a foray into the dying embers of the August transfer window cannot be discounted even for Financial Fair Play-savvy Chelsea.
The possible arrival of Torres will go little way to quelling a near mutiny among San Siro fans with the seven-times European champions making a habit of buying 30-somethings who look past their glittering best.