This study explored the utilization of date powder produced from non-marketable Sukkari and surplus dates as a natural sugar substitute in milk chocolate, with the dual objectives of improving product quality and reducing Saudi Arabia’s reliance on imported sugar. Molding chocolates were formulated with 10%, 20%, and 30% sugar substitution, while coating chocolates contained 20%, 40%, and 60%. Physical, chemical, and sensory properties were assessed immediately after production and following six months of refrigerated storage. Increasing substitution levels led to higher viscosity, with peak values observed at 30% in molding chocolate and 60% in coating chocolate. Ash and moisture contents also rose with substitution, whereas fat, protein, and carbohydrate levels remained largely unaffected. Energy content declined as substitution increased, and no significant differences were detected in peroxide or acid values between control and treated samples throughout storage. Sensory evaluations confirmed that molding chocolate with up to 20% substitution and coating chocolate with up to 40% substitution maintained comparable acceptability to control samples both initially and after storage. Overall, the findings recommend sugar replacement with date powder at 20% in molding chocolate and 40% in coating chocolate to achieve high-quality, nutritionally enhanced products with stable sensory and storage characteristics.