Moments after the Italians took the lead on the night with a 30-yard strike from Hakan Calhanoglu, Arsenal's Danny Welbeck fell to the floor after brushing past Milan defender Ricardo Rodriguez.
After a long wait the referee awarded a penalty - to the disbelief of the Milan players - and Welbeck tucked it away before second-half goals from Granit Xhaka and Welbeck made it 3-1 on the night and 5-1 on aggregate.
The Gunners will also be boosted after the likes of Borussia Dortmund and Lyon exited the competition at the last-16 stage.
An open draw means there will be no seeding or country protection for the quarter-finals.
When is the draw?
The draw will take place on Friday, March 16 in Nyon and is expected to begin at midday.
How to follow the draw
The draw will be streamed live on Uefa.com. Alternately, you can follow proceedings in our LIVE blog.
Europa League round of 16 results
Arsenal 3-1 AC Milan (5-1)
Ties will be played on Thursdays April 5 and 12. The teams drawn first will be at home in the first legs.
Every team in the quarter-final draw