Pasalic has been on the books of Chelsea for six years after joining the Stamford Bridge outfit from Croatian side Hajduk Split in 2014 but has never made an appearance for the club, spending time on loan at the likes of Elche, AS Monaco, AC Milan and Spartak Moscow.
The 25-year-old has spent the last two seasons on loan at Atalanta, helping them to third place and Champions League qualification in the 2018/2019 season.
Pasalic has played his part in Gian Piero Gasperini’s men securing a place in the quarterfinals of Europe’s premier club competition this season.
Atalanta tweeted: "Mario Pasalic stays with us! Our #88 is an Atalanta player on a permanent basis!"
Chelsea announced the sale of Pasalic with a statement on their official website that read: "Atalanta have today exercised their option to sign Mario Pasalic on a permanent deal. The midfielder is currently spending his second year on loan at the Italian side and will now join them permanently ahead of next season.
"We thank Mario for his service to the club and wish him the best of luck for the next chapter of his career."
Pasalic has made 33 appearances in all competitions for Atalanta this season, scoring seven goals.
He has been capped 12 times by the Croatia national team.
