The midfielder, 28, had been linked with a move away from Victory after impressing last season, with English Premier League side Crystal Palace having several bids rejected.
But Milligan has been rewarded for his loyalty, with coach Ange Postecoglou handing him the armband, replacing Leijer.
"Mark is an excellent leader and an integral part of this current Melbourne Victory squad," Postecoglou said.
"Nobody can ever question his commitment to his teammates - whether it be wearing Melbourne Victory colours, or representing the Socceroos - Mark is someone who leads by example and certainly wears his heart on his sleeve.
"We have had a long, tough pre-season and now, with just 25 days to go until the Melbourne derby, everybody is ready to get stuck into the season-proper and show what we can bring to the competition in 2013-14."
After a stint in Asia, Milligan returned to Australia on loan at Victory from Japanese side JEF United in January 2012 before signing a three-year deal in July.
His performances led to Postecoglou labelling him the best player in the A-League as he attracted interest from Palace.
But Palace failed to meet Victory's valuation of Milligan and their advances were rejected.
"Melbourne Victory is a great club and being named captain is truly an honour for myself and any individual who gets to wear the armband," Milligan said.
"It's certainly going to be a highly competitive A-League season and I'm looking forward to leading the boys out on to the Etihad Stadium pitch in Round 1 against Heart."