The 33-year-old, who emerged as the front runner for the job after resigning as Porto coach on Tuesday, has signed a three-year contract.
Villas-Boas not only becomes the youngest ever English Premier League manager but also the most expensive coaching appointment ever after Chelsea paid Porto 13.3 million pounds to trigger the release clause in Villas-Boas’ contract.
Chelsea described Villas-Boas who led Porto to a domestic double and Europa League glory last season, as “the outstanding candidate for the job”.
“He is one of the most talented young managers in football today and has already achieved much in a relatively short space of time,” the club said.
They added: “His ambition, drive and determination matches that of Chelsea and we are confident Andre’s leadership of the team will result in greater successes in major domestic and European competitions.”
Villas-Boas, who replaces Carlo Ancelotti, is returning for a second spell at Stamford Bridge, having work as an assistant and scout under his mentor, Jose Mourinho.
Chelsea, trophy-less last season, noted: “Andre will bring his coaching experience back to a club he is already very familiar with, having previously worked here for three years.
“He has always been highly regarded at Chelsea and everyone here looks forward to welcoming him back and working with him.”
Villas-Boas tried to play down expectations, telling Chelsea TV, the club’s own television station: “Don’t expect something from one man.
“Expect us to create a group dynamic of everybody getting together, with the fans getting together, with people getting excited with the motivation that is in and around us.
“In the new way of communicating and the new leadership – this is the most important thing.
“It is not about my arrival. It is about the continuous success of this club,” he added.
“There is no doubt that the challenge for me is to keep winning.
“I am an individual who has that hunger for success and I want to keep it that way.”
British media reports suggest Chelsea are paying Villas-Boas, who is their seventh manager in eight years, a salary of 4.5 million pounds a year.
One of his first moves as the new Blues boss could be to sign Porto’s star striker Falcao, the 25-million-pound-rated Colombian who netted the only goal in Porto’s Europa League win over Sporting Braga in Dublin.
On Tuesday the way had been cleared for Villas-Boas to move back to London after he sent the club a fax informing them of his decision to join Chelsea.
Turkey coach Guus Hiddink had also been linked with a return to Chelsea, where he won the FA Cup as a caretaker manager in 2009.
Wednesday’s announcement brings to an end Chelsea owner Roman Abramovich’s search for the man he perceives as the right one to end the club’s recent trophy drought and crucially deliver Chelsea a long awaited first Champions League title.
Villas-Boas, who cut his coaching teeth under Sir Bobby Robson at Porto in 1993, served under Mourinho at Porto, then following ‘the Special One’ to Chelsea and later Inter Milan.
The Porto-born Villas-Boas was appointed manager of Academica in 2009 with the club then bottom of the Portuguese league.
He led them to an 11th-place finish and a Cup semi-final.
In 2010 he joined Porto, winning the Portuguese SuperCup in his first term, and then the treble this year.
Porto were unbeaten in the league last season with 27 wins in 30 matches, becoming only the second Portuguese club to finish a league season unbeaten, after Benfica in 1972-73.
Porto have acted quickly to fill the void left by Villas-Boas by naming assistant coach Vitor Pereira as his successor.
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