The Toffees were believed to be keen to bolster their attacking ranks and build on their positive start to the Premier League season.
However, the Rossoneri believe that the 17-year-old has the talent and determination to make it to the very top, so have no intention of letting their prised youngster leave any time soon.
The Italian outfit’s vice president Adriano Galliani has notified Everton that the player will be staying at the San Siro for the foreseeable future.
Niang signed for AC Milan from French outfit Caen this summer in a £3million deal, but has so far been limited to one substitute appearance in Serie A.
David Moyes showed an interest in the starlet in the summer transfer window before he opted to move to Italy and it is thought that the opportunity to give the player game time could tempt AC Milan to sanction the move.
He is expected to have a bright future for his national team, France, where he has been tipped to eventually make the senior side.
Niang has played for the French U21s, but has been banned until December 2013, due to his attendance at a night out in the build up to Euro 2013 qualifiers.
Despite this, Niang has been told that he will gain first team opportunities if he keeps working hard in training.