Substitute Nikola Kalinic stuck late on to secure a point after Matteo Politano had given the away side an unexpected lead.
Milan dominated the first half, racking up 10 shots to Sassuolo's three, but suffered an early setback when Alessio Romagnoli was taken off in the sixth minute due to injury, being replaced by Mateo Musacchio.
The San Siro side should have taken the lead through Franck Kessie but the Ivory Coast international failed to convert from point-blank range after good work from Ricardo Rodriguez.
Milan captain Leonardo Bonucci jumped highest soon after but could only head over the bar as Milan pressed early in the second half for the elusive opener.
Gennaro Gattuso's side, supposedly encouraged by Inter's earlier loss to Torino on Sunday, knew they could cut the gap on their rivals to just five points, with two Champions League qualification places still very much up for grabs.
Milan's recent upturn has seen manager Gattuso rewarded with a new contract, but the Italian saw his side struggle for the majority of Sunday's match against a Sassuolo side scrapping to stay in Serie A.
The visitors did well to soak up pressure and had a decent chance on goal through Antonino Ragusa, but the 28-year-old could only strike tamely at Gianluigi Donnarumma.
But Sassuolo went one step further moments later when Matteo Politano latched onto Luca Mazzitelli's headed through ball to slam past Donnarumma on the half volley.
While Milan's recent resurgence has been impressive they have lacked a consistent goalscorer, with Patrick Cutrone still their top scorer in the league, and their was a noticeable lack in creativity as the hosts searched for an elusive equaliser.
Nikola Kalinic, widely perceived as a poor signing for Milan from many Serie A fans, had a massive chance to equal things up late on but the substitute headed Hakan Çalhanoğlu's cross over the bar.
However, the Croatian made amends just minutes later, controlling Mateo Musacchio's cross brilliantly before spinning and firing high into the roof of the net for his fifth league goal of the season.
Milan pressed for a winner, but Kalinic could only head an effort straight at Andrea Consigli, Çalhanoğlu's long range crack sailed high and wide and Giacomo Bonaventura's shot was impressively saved by Consigli.