Ilicic made it 3-0 with a clinical finish after a Pasalic assist and the Slovenian attacker struck again on 72 minutes when he curled a majestic strike into the top corner from 20 yards. Luis Muriel then replaced Ilicic and scored with minutes of his introduction, pouncing on hesitancy from Donnarumma to round out a resounding victory.
Atalanta have scored a league-best 43 goals this season and trail Roma by four points in the race for the final Champions League spot. The Bergamo side are competing in the Champions League for the first time this season and were drawn against Valencia in the last 16 after scraping through the group stage.
The defeat was Milan's worst loss since going down 5-0 to Roma in 1998. "We have to work and improve. We entered the pitch with too little technical and tactical clarity. It's a terribly insufficient performance," admitted Milan coach Stefano Pioli.
Milan club manager Boban, a former midfield great with the club, said it will be a miserable holiday period. "It was an embarrassing performance. We will have to wake up and react. It will not be a good Christmas," said the Croatian. In other early matches Sunday, eighth-placed Bologna saw off Lecce 3-2 wile Mario Balotelli came off the bench to score in Brescia's 1-1 draw at Parma.
Napoli travel to Sassuolo later searching for a first victory in the league since October 19. They have gone eight matches without a win in Serie A and were beaten 2-1 by Parma last weekend in Gennaro Gattuso's first game in charge. The former AC Milan and Italy international replaced Carlo Ancelotti, who was appointed Everton manager on Saturday - just over after he was sacked by Napoli.
Inter Milan and reigning champions Juventus are locked on 42 points at the top as the Italian league prepares to head into a two-week winter recess. Romelu Lukaku scored twice as Inter beat Genoa 4-0 on Saturday while Juventus, who overcame Sampdoria 2-1 on Wednesday, take on Lazio in the Italian Super Cup in Saudi Arabia later on Sunday.