The striker held decisive talks with Milan vice-president Adriano Galliani yesterday.
"The meeting between Adriano Galliani, Stephan El Shaarawy and his entourage has taken place," read a statement on the club website.
"It all went well. Stephan, who has always been a Milan fan, confirmed his strong desire to continue playing in the Rossoneri jersey.
"That proposal was shared by Milan with conviction and trust. Milan and El Shaarawy go forward together, as they have done since June 2011.
"No transfer, no rumours, no links. Milan, the Rossoneri colours and the Pharaoh will absolutely stick together."