Milan confirmed the centre-back has signed a contract until June 2025 after they took up the option to buy the 23-year-old.
Tomori had been at Milan since January and helped them qualify for the Champions League by finishing second in Serie A.
Earlier this month Milan had held talks with Chelsea in an attempt to lower the agreed £25m fee but the Premier League club refused, according to Sky in Italy.
The 23-year-old England International made 17 league appearances at Milan, scoring once against Juventus, as he replaced club captain Alessio Romagnoli.
Prior to his loan move the Chelsea academy graduate Tomori made only one Premier League appearance in the 2020-21 season under previous Blues boss Frank Lampard.
Confirming his departure on Thursday June 17, Chelsea said: “Chelsea is grateful to Fikayo for his contributions at the club, from youth level to men’s first-team squad, and wishes him the very best in his future career.”