The former Juventus tactician put pen to paper on a three-year contract and will begin working with the Premier League side after the European Championship this summer in France.
"I am very excited about the prospect of working at Chelsea Football Club," Conte told the team's website. "I am proud to be the coach of the national team of my country and only a role as attractive as manager of Chelsea could follow that."
The Guardian reports that Conte's three-year deal will pay him £5 million per season, with a £5-million bonus to be handed out should he guide the Blues to a Champions League title.
The fiery 46-year-old becomes the fifth Italian to manage the club after Gianluca Vialli, Claudio Ranieri, Carlo Ancelotti, and Roberto Di Matteo.
"Chelsea and English football are watched wherever you go, the fans are passionate and my ambition is to have more success to follow the victories I enjoyed in Italy," Conte added.
"I am happy we have made the announcement now so everything is clear and we can end the speculation. I will continue to focus on my job with the Italian national team and will reserve speaking about Chelsea again until after the Euros."
Chelsea's interim manager Guus Hiddink will remain in charge of the team until the conclusion of the season. Hiddink replaced Jose Mourinho as manager in December.
"We are very pleased to have recruited one of the most highly regarded managers in world football and we are equally pleased to do so before the end of the current season," Chelsea director Marina Granovskaia said. "This aids our future planning.
"I would also like to take this opportunity to thank Guus Hiddink, who has done a great job since he joined us in December."
Prior to joining the Italian national team, Conte enjoyed three successful years in charge of Juventus, with which he helped win three-straight Serie titles.
He also had a fruitful career as a player for Juventus, winning five league titles and the Champions League during his more than 400 appearances.
Conte guided the Italian team to the Euros after an impressive qualifying campaign where the Azzurri went unbeaten and finished top of its group. Italy will take on Belgium, the Republic of Ireland, and Sweden at this summer's competition.