The 27-year-old Brazilian is believed to have signed for around £59m ($94.05m), which beats the world record transfer fee of £46.7m ($75.3m) paid by Real to Juventus for Zinedine Zidane in 2001.
Kaka, who was also a target for Premier League club Chelsea, revealed that he turned down a £100m move to Manchester City in January because he did not want to leave Milan mid-season.
"Manchester City and Real Madrid are two different clubs with different situations. At that time, it was mid-season, I had a strong emotional impact due to the Italian fans requesting me to stay, and I decided to stay.
"Now another chance came up and AC Milan is in a big crisis (financially). For me, the sporting project (at Madrid) is interesting and will be an important boost to continue my career in the highest level.
"I wanted to stay on at Milan, but the world (financial) crisis affected a lot of clubs, especially those like Milan which are businesses. So then, I spoke with the Milan directors and we reached the conclusion that the best thing for everybody would be to sell."
"I want to thank Milan, as they were the club who put me on the international scene. They gave me the opportunity to become a big name in Europe.
"I'm happy to leave Milan by the front door, with a lot of friends. It has been very emotional to see what the Milan fans have done for me."
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