Chelsea have signed Portugal forward Joao Felix from Atletico Madrid for a fee in the region of £45m, with England midfielder Conor Gallagher going the other way for about £33m.
Felix, 24, who has signed a seven-year deal to begin a second spell at Stamford Bridge, scored four goals in 20 appearances during a loan spell in west London in 2023.
“I’m really happy to be back at Chelsea and I can’t wait to get started,” said Felix. “I can see some familiar faces from the last time I was here, which is always nice.”
Gallagher meanwhile has signed a five-year contract with the Spanish top-flight club.
Gallagher joined Chelsea at the age of six and went on to make 90 appearances, scoring 10 goals.
He had entered the final year of his contract at Stamford Bridge so Chelsea wanted to sell now to avoid losing him on a free transfer next summer.
“To everyone at Chelsea, thank you for making my dreams come true,” Gallagher wrote on Instagram. “It’s been an absolute honour every time I put on the shirt, and it was a dream come true to captain the team on many occasions.
“I loved every moment. These memories will last forever. I appreciate all the love and support from the fans.”
The collapse of Chelsea’s talks to sign Atletico striker Samu Omorodion had delayed Gallagher’s move to Spain, but the Felix deal frees up the required funds for Atletico to complete the transfer.
Gallagher spent five days in a hotel in Madrid earlier this month expecting a deal before flying back to London when the move stalled.
Gallagher had loan spells at Charlton, Swansea, West Brom and Crystal Palace before breaking into the Chelsea first team at the start of the 2022-23 season.
He has won 18 England caps since making his debut in 2021 and was part of the Three Lions squads for the 2022 World Cup and Euro 2024.
Nizaar Kinsella, BBC Sport football news reporter
Conor Gallagher’s exit will leave a bitter taste in the mouths of some match-going Chelsea supporters who absolutely adored him.
They held up a banner in the match against Tottenham, a club many thought he might join, in May in protest of his expected departure.
That exit has happened, but a crumb of comfort is that Chelsea have sold him outside the Premier League to Atletico Madrid in Spain, avoiding the kind of pain some fans still feel when watching Mason Mount line up for Manchester United.
Chelsea have also handled his departure well by putting together an emotive video package that highlights his bond with the club and wishing him well for the future on all their channels.
It reads and feels like a celebration of the career of the boyhood Chelsea fan, who has been with the club since the age of six, as he departs for Wanda Metropolitano.
It’s a positive end to a strange transfer saga which saw Gallagher training alone at Cobham in limbo as the two clubs tried to pull off a bizarre swap deal.
Gallagher will again be able to focus on his football and could be a good fit for Diego Simeone’s dogged, high energy and physical style of play.
