The Spain international finished the 2018-19 campaign on loan at Wanda Metropolitano and he made no secret of his desire to stay on in the Spanish capital as that initial agreement came to a close.
Atletico also opened the door for the 26-year-old to remain on their books, although transfer talks have dragged on.
Sources close to discussions revealed in June that Morata had been assured that a deal to keep him in Madrid would be done.
Atletico have delivered on that promise, with an agreement reached that will see the striker initially stay on with the Rojiblancos in a loan capacity.
A transfer believed to sit at around the €65 million mark will then be officially pushed through in June 1, 2020.
Atletico said in a statement released on the club’s official website:
“Atletico Madrid and Chelsea have reached an agreement over the transfer of Alvaro Morata from July 1, 2020.
“The Spanish striker will play at our club on loan this season, as was agreed when he joined Atletico Madrid in the January transfer window, and the move will become permanent at the beginning of the 2020-21 season.
“Morata made his debut at our club on February 3 against Betis. Since then, the Spaniard has played 17 games and scored six goals.”
Morata joined Chelsea from Atletico’s arch-rivals Real Madrid in the summer of 2017.
The Blues invested £58m in his ability, but struggled to get the desired return out of a hard-working frontman.
Across 72 appearances for the Premier League outfit, Morata recorded 24 goals.
The hope was that he would deliver much more, with Chelsea having snapped him up as a replacement for Diego Costa. Morata is now a club colleague of a fellow Spain international in Madrid.
He has conceded on a regular basis that he never really settled in English football and will be hoping to rediscover his spark back in the familiar surroundings of his homeland after enjoying a productive start to his spell with Atletico.