Werner will move to Stamford Bridge next month after the conclusion of the Bundesliga season, which has two match days left.
The 24-year-old becomes manager Frank Lampard’s second signing of the summer after the acquisition of Hakim Ziyech from Ajax Amsterdam.
Werner has scored 32 goals, including 26 in Bundesliga, and has registered 13 assists from 43 appearances across all competitions for Leipzig this season.
Discussing his move to West London, Werner told the official Chelsea website: "I am delighted to be signing for Chelsea, it is a very proud moment for me to be joining this great club.
"I of course want to thank RB Leipzig, the club and the fans, for four fantastic years. You will forever be in my heart.
"I look forward to next season with my new team-mates, my new manager and of course the Chelsea fans. Together we have a very successful future ahead of us."
Chelsea director Marina Granovskaia added: "We are very excited that Timo Werner has chosen to join Chelsea.
"He is a player who was coveted all over Europe and it is no surprise, he has that rare mix of being young and exciting and yet established and proven.
"We can't wait to have Timo on board, but until then we wish him and RB Leipzig all the best for the rest of this season."
Chelsea return to Premier League action with a game against Aston Villa on Sunday.
