The 27-year-old joined AC Milan last summer but has failed to make a significant impact at the San Siro.
Birsa told ChievoTV: "I am happy, because I had a good first half of the season and the second wasn't so good. I thank the club for their faith in me and will give my all to repay them.
"I like to help my teammates to score goals and to get them myself, but I am working on helping out more in defence.
It is unclear whether there is an option to make the deal permanent after the conclusion of the season.