Chalobah, who last month signed a lucrative new five-year contract with the Blues, has moved to the City Ground on an emergency loan deal through to January 15.
The 18-year-old midfielder caught the eye last season during a loan spell with Forest's Championship rivals Watford where he was a key figure in helping the Hornets to reach the play-off final at Wembley, scoring five goals in 42 appearances for Gianfranco Zola's team.
His spell at Vicarage Road led to a host of clubs, including Watford, wanting to take him on loan this season but it is Forest who have won the race for his signature.
Chalobah, who came through the youth ranks at Chelsea, is widely considered to be one of the most promising talents in English football.
He has been heavily involved with the first team since Jose Mourinho returned to Stamford Bridge and his prospects of an eventual breakthrough into the main squad look increasingly likely following his inclusion in the pre-season tour of Asia.
Mourinho is keen for the England U21 international to continue his development by playing more matches and the Portuguese thinks Forest, who have spent heavily this summer in an attempt to mount a serious challenge for promotion to the Barclays Premier League, provide the perfect platform.
Forest have been trying to sign a holding midfielder for most of the summer. The Reds had a dozen bids for Middlesbrough's Grant Leadbitter turned down and were also rebuffed when they enquired about Brighton's Liam Bridcutt on transfer deadline day.
Chalobah will fill the void left by Adlene Guedioura who Forest sold to Crystal Palace at the beginning of this month for a fee in the region of £2.5million.
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- Gianfranco Zola