The 19-year-old joined the Serie A side in 2012 from Ligue 2 outfit Caen but has only made 28 appearances since his arrival at the San Siro.
Niang has made just eight top-flight appearances for Milan this term, seven of which have come from the bench, and the forward is itching for game time.
The France Under 21 international revealed there were a number of offers on the table but he opted for Montpellier as he aims to improve his all-round game.
"At Milan in the last few months I could not express myself as I wanted, but I have no regrets for choosing the Rossoneri," he told L'Equipe.
"I have a great desire to do well at Montpellier and my goal is to come back to AC Milan stronger than before.
"Big clubs such as Marseille and Lyon wanted me too but I had no doubts about Montpellier."
Niang left France on uneasy terms with local fans but insists he determined they will see his true colours during his time at the Stade de la Mosson.
He added: "In France they have not got a good picture of me, they think I'm arrogant and snobbish.
"But it's not me, and with the return to Ligue 1 I'll prove it with humility."