Real Madrid have decided to sell Lopez after signing Costa Rica goalkeeper Keylor Navas from Levante earlier this month.
The likes of Liverpool and Monaco have been credited with an interest in Lopez, but Milan seem to have won the race for his signature.
Lopez is expected to undergo a medical in Milan early next week before signing a three-year deal at the San Siro.
Inzaghi believes Lopez will be a valuable addition to his squad.
“I am very happy, as Milan are doing things in the best way and I hope we can do well together with the team,” Inzaghi told the club's official website.
“Diego Lopez is very important, an experienced goalkeeper who will improve our squad.”
Inzaghi also suggested that they could re-sign Taarabt after he enjoyed a successful spell on loan at Milan last season.
""Should the gift of mid-August be Taraabt ? Let's see."