French winger Biabiany becomes Milan's ninth acquisition of the transfer window as they aim to bounce back from a dreadful 2013-14 season that saw them finish eighth in Serie A.
The details of the deal have yet to be confirmed, although Milan are thought to have paid around €4million to bring the 26-year-old to San Siro.
Defender Cristian Zaccardo is expected to go the other way and move to the Stadio Ennio Tardini but no announcement has been made by Parma, who finished sixth in the Italian top flight last term.
A player renowned for his pace, Biabiany joined Parma in a co-ownership deal in 2012 after two loan previous loan spells at the club.
The former France Under-21 international played a key role in Parma's success in the previous campaign, making 36 Serie A appearances and finding the net six times.
Biabiany, whose deadline day move follows the loan signing of Chelsea's Marco van Ginkel, could make his debut for Milan at Parma a week on Sunday.