The seven-times European champions sacked Allegri after a shock weekend loss to Sassuolo and have turned to Seedorf, who won a host of honours in Milan as a player.
Seedorf, 37 and the first man to win the Champions League with three different clubs after stellar spells with Ajax, Real Madrid and Milan, has spent the past 18 months with Rio-based Botafogo.
But he said now was the time to take up a new challenge — and hang up his boots.
“I am going to stop playing after 22 years. It was a difficult night — but I am satisfied with what I have achieved in my career,” said Seedorf, who will return to Italy on a two-and-a-half year deal.
“This experience of a year and a half (with Botafogo) helped me grow and will help me in the next stage of my life — as coach of Milan,” Seedorf told reporters in Rio.
“When the chairman asked me, I couldn’t say no,” said Seedorf, who said he made up his mind Monday but pondered overnight the wrench of retiring from playing — a sensation which brought a “flashback” of his career.
Seedorf said now was not the time to talk about how he would instruct Milan to play but did reject any idea he would find the transition from pitch to dugout difficult.
“Being in charge of former teammates won’t cause a problem — on the contrary, I know them,” he said.
“I am very happy to have this dream chance to go back,” he added.
As a player for the Rossoneri at the San Siro, Seedorf was a figurehead, making more than 400 appearances and winning the Serie A title twice as well as a pair of Champions League crowns.
The Surinam-born star had his first taste of European glory with Ajax in 1995, a second success with Real Madrid three years later and he then won club football’s top prize with Milan in 2003 and 2007.
Seedorf, who added a Rio league crown to his stellar CV last year, had been expected to prolong his stay in Brazil but was widely believed to have had a clause inserted into his Botafogo deal allowing him to leave for a top coaching post.
His performances in midfield helped Botafogo to qualify for the Copa Libertadores, the South American equivalent of Europe’s Champions League, which starts on January 29, for the first time in 17 years.
Botafogo had been hoping he would stay on for that event — but finally allowed him to move on with their blessing as Milan plumped for him ahead of former striker Filippo Inzaghi, the club’s youth coach.
“There is a feeling of sadness,” said Botafogo chairman Mauricio Assumpção, who saluted Seedorf for his efforts.
“It is sad to see you stop playing, yet there is pleasure that the footballing world is gaining you as a coach. The others will now have to chase after Milan,” Assumpcão predicted.
Seedorf said he was sure Botafogo would survive and prosper in his absence.
“I had a great time with Botafogo and I am sure they will acquit themselves very well in the Libertadores,” he predicted.
His next challenge is sizeable, however.
After Sunday’s reverse to Sassuolo, Milan stand just 11th in the table, 30 points behind leaders Juventus and 20 behind Napoli, who occupy the third and last qualifying spot for the Champions League.
A four-goal salvo from Sassuolo’s 19-year-old starlet Domenico Berardi sealed Allegri’s fate — club vice-president Barbara Berlusconi launched a verbal attack on the team afterwards and demanded change in the dugout.
Allegri took over Milan in time for the 2010/2011 season and won the title in his first season in charge.
Milan finished runners-up the following season but Allegri saw his side decimated as a host of key players — among whom Zlatan Ibrahimovic, Thiago Silva and Seedorf himself — all left the club.
Despite the overhaul needed and the club’s poor first half of the campaign, Seedorf professed himself “calm about the challenge which awaits me.”