The 29-year-old looked likely to return to his homeland, with reports claiming that his former club were leading the race to land his signature.
However, the Brazilian outfit were unable to agree terms with Robinho after being left unable to afford his demanded wages.
"Santos FC, the player and Milan tried to get the values and conditions that would allow the transfer, but even with the effort from all sides, it was not possible to achieve the right numbers," a club statement read.
"The cost of the transfer, including payment to the Italian side and the player's wages, is still far from the reality of Brazilian football."
Robinho is likely to stay at AC Milan for the upcoming season.