Since the Premier League finished, Frank Lampard has prioritised the signing of a left-back, with neither Marcos Alonsos nor Emerson Palmieri flourishing in the role last season.
Looking to add more homegrown talents to his squad, he had previously identified Chilwell as the perfect acquisition, with him having impressed with Leicester over the past couple of seasons.
Chilwell spoke of his delight at the move.
'I am delighted to be joining Chelsea at this very exciting time for the club," he said.
'I'm looking forward to being a part of this young, dynamic squad led by Frank Lampard as we challenge for honours next season.
'I can't wait to get started and hopefully it won't be long before we're playing in front of the Chelsea fans at Stamford Bridge.'
Chelsea were under a transfer ban last season but have certainly made up for lost time this summer, having already splashed big money on Hakim Ziyech of Ajax and Timo Werner of RB Leipzig.
In total, they have now spent £136m.
The spending could continue, too, as they continue to be linked with a £90m move for Kai Havertz of Leverkusen.