The 19-year-old – who can play in a variety of positions in defence and midfield – has been a long-term target for Blades boss Chris Wilder.
Despite his young age, Ampadu had already earned 13 wallows caps and impressive after being handed a defensive role by Ryan Giggs for the nations Cup games against Finland and Bulgaria last week.
“Ethan is an outstanding young player for Chelsea, and we’ve worked really hard to get his signature for the season,” said Wilder.
“We need to thank Frank Lampard and the people at Chelsea for helping making this happen. We’ve got a good relationship with them and they know we’re going to take good care of him.
“It’s an important season for Ethan and playing in the Premier League for us is a good move for everyone. He brings a lot of qualities to the group and he’s someone we’ve tracked for two or three seasons.”
Ampadu began his career at local club Exeter making his senior debut aged just 15 in an EFL Cup tie against Brentford in August 2016.
He joined Chelsea the following year and run 2018 signed a five-year deal at the London club, being sent out on loan to RB Leipzig last season.
But the move to the Blades – who impressed on their return to the top-flight last season defying expectations they would be relegated – will provide Ampadu with experience at the next level in the development of his career.