The 23-year-old Diaz spent three seasons on loan at Milan. He helped the Italian team win a Serie A title in 2022 and reach the Champions League semifinals this season.

Diaz joined Madrid from Manchester City in 2019, but barely played in his single season in Spain’s capital.

He will rejoin a squad that won the Spain’s Copa del Rey last season but needs to replace the loss of Karim Benzema.

Diaz is the third signing Madrid has made this month, following a deal reached with Borussia Dortmund for midfielder Jude Bellingham and the decision to buy back left back Fran García from Rayo Vallecano.

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