Chelsea met the buyout clause in the 25-year-old's contract with Atletico and he will now negotiate personal terms.
Costa scored 36 goals in 52 games for Atletico this season as they
won their first La Liga title since 1996
and reached the
Champions League final.
The Brazil-born forward is in Spain's World Cup squad.
Diego Costa factfile
- Born: 7 October 1988, Lagarto, Brazil
- Clubs: Braga 2006, Penafiel 2006 (on loan), Atletico Madrid 2006-09, Braga 2007 (on loan), Celta Vigo 2007-08 (on loan), Albacete 2008-09 (on loan), Real Valladolid 2009-10, Atletico Madrird 2010-14, Rayo Vallecano 2012 (on loan)
- League appearances for Atletico: 94
- League goals for Atletico: 43
- La Liga wins: 2013-14
- Copa del Rey wins: 2012-13
Chelsea manager Jose Mourinho
said in May that the addition of a "killer" striker
would be a key priority during the summer.
The London club scored 71 goals in the Premier League
this season, 31 fewer than champions Manchester City, who finished four
points ahead of them.
Chelsea strikers Samuel Eto'o, Fernando Torres and
Demba Ba contributed a total of 19 of those in the league, with
33-year-old Eto'o, now a free agent, scoring nine of them.
"We have to try to win as a team, to improve as a team,
but also add the attacking player with that killer instinct," Mourinho
said last month.
Mourinho will hope that Costa will go some way towards
addressing that problem having enjoyed a prolific campaign with
Atletico.
Costa scored 27 goals in La Liga and only finished
third behind Real Madrid's Cristiano Ronaldo (31) and Barcelona's Lionel
Messi (28) on the list of top goalscorers.
The striker also scored against Chelsea from the
penalty spot in the semi-finals of the Champions League, one of his
eight goals in the tournament, as Atletico came from behind to
win 3-1 at Stamford Bridge.
Costa was born and raised in Brazil and made two friendly appearances for them last year before he
became a naturalised Spaniard.
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