Kepa Arrizabalaga will spend the entire season on loan at the Spanish team, according to Real Madrid, which announced the agreement on Monday.
The 28-year-old will fill in for Thibaut Courtois, who will be out for several months after tearing his anterior cruciate ligament (ACL) in his left knee during a training session last Thursday.
Kepa Arrizabalaga joined Chelsea from Athletic Bilbao in 2018 for a club record amount of 80 million euros.
But he fell out of favour with the London club, who bought goalkeeper Robert Sanchez from Brighton & Hove Albion this summer.
He was apparently pursued by Bayern Munich, who are looking to replace their injured custodian, Manuel Neuer, but Real Madrid moved faster to secure the contract.
Courtois’ injury is a big setback for Real, since they will be without one of their key players for the foreseeable future.
The keeper may very well be in line to make his debut later this week against Almeria as Los Blancos travel in search of their second win of the season.