"Yes, it's true. I'm out," Fonseca told reporters when he lowered his car window. "That's life ... I did everything I could."
Milan are eighth in Serie A, trailing leaders Atalanta and Napoli by 14 points -- far worse than the second place finish earned under Stefano Pioli last season.
Fonseca was hired in June and oversaw only 12 wins in 24 matches across all competitions.
Milan are expected to announce the move later on Monday and hire Sérgio Conceição, another Portuguese coach, as Fonseca's replacement.
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