The Rossoneri are out of sorts in Serie A but could be rejuvenated with the signing of this England international.
Walcott has struggled to secure first-team action this year after failing to convince French manager Arsene Wenger he has the attributes to play in a central attacking role - the position he desires.
Instead, the 27-year-old has been forced to ply his trade on the right-wing. However, even in this supporting role Walcott has been forced to battle for his position with the likes of Alexis Sanchez, Aaron Ramsey, Santi Cazorla and the emergence of Nigerian starlet Alex Iwobi.
The former Southampton attacker has featured in 27 league games this season, scoring five goal and providing two assists. He could now make a surprise transfer to Serie A strugglers AC Milan in a deal that would also see youngster Manuel Locatelli move in the opposite direction.
According to CalcioMercatoWeb, Milan have reached out to the Gunners to enquire about his availability. Locatelli meanwhile - who made his senior debut at home to Carpi recently - could be a bargaining tool in any transfer.
The midfielder is reportedly an Arsenal target, while the Rossoneri could use Walcott as a replacement for attacker Jeremy Menez, who looks set to depart the San Siro in the upcoming transfer window.