The Blues lost the FA Cup final to Manchester City on Saturday and lie ninth in the Premier League with two games of the campaign to go.
Alonso rose to prominence as one of Europe’s brightest coaches by guiding Bayer Leverkusen to an unbeaten German league and cup double in the 2023/24 season.
However, he lasted just seven months in the Real Madrid hot seat. Appointed last year, he departed the Spanish giants in January.
“Chelsea Football Club is delighted to announce the appointment of Xabi Alonso as manager of the men’s team,” Chelsea said in a statement.
“The Spaniard will begin his role on July 1, 2026, having agreed a four-year contract at Stamford Bridge.”
Alonso faces a huge task to get Chelsea back in the running for major honours.
Chelsea did win the World Club Cup and the Uefa Conference League last year but have little else to show for well over one billion pounds of spending on players since as US consortium BlueCo took over in 2022 following Roman Abramovich’s trophy-laden ownership of the club.
Defeat at Wembley on Saturday means they have now gone eight seasons without a domestic trophy.
Fans have continuously protested against BlueCo, who have embarked on a scattergun approach to hoovering up young talent from across the globe.
That policy has secured some notable successes such as England international Cole Palmer.
But a lack of experience in both the playing squad and, often in the coaching staff, has been blamed for a lack of consistency.
Alonso becomes the sixth permanent manager to take charge at Stamford Bridge in the past four years after Thomas Tuchel, Graham Potter, Mauricio Pochettino, Enzo Maresca and Liam Rosenior.
The 44-year-old has a point to prove after a turbulent short spell in Madrid.
Alonso’s arrival is a coup for Chelsea’s much-criticised owners.
Many Liverpool fans were desperate for him to return to Anfield, where he starred for five years as a player between 2004 and 2009, to succeed the under-fire Arne Slot. (AFP)