The central defender has signed a five-and-a-half-year contract with Jose Mourinho's side but will remain on loan with the French club until the end of the season.
The 19-year-old revealed earlier this month that he had received a call from Jose Mourinho, and it is believed that conversation persuaded the youngster to reject rival suitor Manchester City.
Zouma becomes Chelsea's third signing on the January transfer window following the arrivals on Nemanja Matic, from Benfica, and Basel winger Mohammed Salah.
The defender was a part of the France team that won the Under-20 World Cup last year and fits into Mourinho's long-term "project" for the club.
He told reporters: "[He will be a] Saint-Etienne player until July. [He is] another young player Chelsea signs. We like the profile."
Since making his professional debut for Saint-Etienne at the age of 16, Zouma has played over 50 games for the Ligue 1 club.
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