Donnarumma became the youngest goalkeeper ever to debut in Serie A at the age of 16, and has since become Milan's undisputed number one despite only turning 18 in February.
The teenager, who stands at 6'5", also became Italy's youngest ever stopper when he made his international debut in last September's friendly with France.
"We decided to not renew because there was a situation which was too hostile and violent that had been created and it was not possible to get out of there," Raiola told reporters.
"They threatened Gigio and also his family – threats of not playing, of death (some of the fans), banners that the club never took down and a passive attitude toward the boy. It was never an economic matter, if the two parties want a solution, the solution is found.
"They had the budget of a top club and Gigio is a top player, I would have found the way to satisfy everyone, but we never got to talk about this. You can't keep a player by threatening him. Now there is a genuine risk he could miss a year. His quality makes that improbable, but this is already on the verge of mobbing."
Donnarumma, who has been linked with Real Madrid, Juventus and Paris Saint-Germain, is currently with Italy Under-21s at the Under-21 European Championships in Poland.