The transfer details for the 25-year-old were not disclosed, but British media reported that the transfer fee was about $57 million.
He will reunite with manager Enzo Maresca, who joined Chelsea in June after leading Leicester to the Championship title last season.
"It is amazing to be sitting here as a Chelsea player," Dewsbury-Hall said. "This is a club people grow up watching and hoping to one day play for, so it is a privilege to be here."
Dewsbury-Hall netted 12 goals and contributed 12 assists in 44 league matches last season, earning him the title of Leicester's player of the season.
Wolves have signed Norway striker Jorgen Strand Larsen on a season-long loan from Celta Vigo.
The 24-year-old will spend the 2024-25 season at Molineux in a move which will become permanent should certain clauses be triggered.
Nottingham Forest midfielder Orel Mangala has joined Lyon on a permanent deal. The Belgium international, who was part of the Euro 2024 squad, spent the second half of last season on loan at the Ligue 1 club.
Southampton manager Russell Martin has signed a new contract that will keep him at St Mary's Stadium until the summer of 2027.
Martin led the Saints back to the Premier League at the first attempt with a play-off final win over Leeds at Wembley in May.
