The Portugal youth star becomes the Blues’ first summer signing and could make his debut at the Club World Cup.
"Chelsea is pleased to confirm the signing of Dario Essugo from Sporting CP," read a club statement.
"The midfielder, who spent last season on loan in La Liga with Las Palmas and is a Portugal Under-21 international, has signed a contract until 2033.
"Essugo began his career in Sporting's academy and became the youngest-ever player to feature for the club when he made his senior debut aged 16 years and six days against Vitoria de Guimaraes in March 2021.
"Later that year, he broke Luis Figo’s record as the youngest starter for Sporting, aged 16 years, 11 months and 17 days."
Chelsea have reportedly paid €22.3 million (£18m) for Essugo, who is expected to play a key role under Enzo Maresca next season.