Milan's 3-1 elimination on aggregate was their second disappointment in four days following a 1-1 draw with Sampdoria at the weekend that left them 12 points behind leaders Juventus in Serie A.

Milan, fielding a strong side fronted by Alberto Gilardino with Kaka in support, had an early chance to take the lead when the ball broke loose on the edge of the area to Kaka but the Brazilian playmaker failed to get any power on his shot.

There was nothing wrong, however, with the shot unleashed by Mariano Gonzalez from 20 metres out that curled into the top of Milan's net in the 10th minute.

Palermo striker Andrea Caracciolo grabbed the home side's second goal eight minutes later, running on to Eugenio Corini's through ball before finishing coolly into the bottom corner of the net.

At 2-0 down, Milan belatedly began to press forward, but five minutes into the second half Palermo struck again, this time on the break, when Gonzalez raced into the area, rounded Kalac and slotted home his second goal of the night.

Milan coach Carlo Ancelotti reacted by sending on Filippo Inzaghi, Andrea Pirlo and Serginho in an attempt to close the gap.

The closest they came was in the 86th minute, when Palermo keeper Mariano Andujar saved twice in quick succession to prevent Clarence Seedorf and then Kaka pulling one back.