"I am delighted to be joining Chelsea at this very exciting time for the club," Chilwell told the club's official website.
"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."
The England international is one match away from completing a century of Premier League appearances after his time with Leicester.
Last season he helped the Foxes finish fifth, scoring three goals in 27 top-flight matches, including a strike against Chelsea while also supplying three assists.
He will hope to make his debut at Brighton & Hove Albion on Monday 14 September.