ESPN reported Saturday that Chelsea agreed a fee in the region of £75 million for Fofana after Leicester demanded the same £80m fee they received for defender Harry Maguire when he moved to Manchester United in 2019.
Fofana, 21, joins Chelsea after spending the past two seasons at the King Power Stadium following his move from then-Ligue 1 club Saint-Etienne.
"The two last days have been really big days for me and I'm very happy," said Fofana after completing the move.
"I trained this morning with the team and it's a dream for me. I'm very excited to start playing games for the fans and the club.
"I'm here to win trophies -- the Champions League, Premier League, FA Cup, Carabao Cup, everything. I came here to win and the club is built to win trophies so I'm here to continue that."
Chelsea chairman Todd Boehly said the club is "delighted" to have Fofana joining their ranks.
"Wesley is a hugely promising defender who has already proven his quality in the Premier League at a young age," Boehly said in an announcement.
"We are delighted we were able to bring one of Europe's most exciting talents to Chelsea and further strengthen that area of our squad, both for this season and many more to come."
Chelsea manager Thomas Tuchel will welcome the arrival of Fofana after seeing centre-backs Antonio Rudiger and Andreas Christensen leave this summer and admitting the club granted Marcos Alonso's request to leave Stamford Bridge before the end of the transfer window.