Blues secure Cahill's services
The England defender, 26, has become manager Andre Villas-Boas' first January recruit.
Cahill's capture followed a fortnight of wrangling over the player's personal terms.
The parties reportedly settled on wages of £80,000-per-week on Friday, £20,000 less than Cahill was said to be demanding.
The player then travelled to London to undergo a medical and watched his new club's 1-0 Premier League win over Sunderland on Saturday.
Chelsea were once again far from convincing at the back and supporters will be hoping Cahill can provide the much-needed solidity for which they were long renowned.
The player told his new club's official website: "Chelsea is a massive club, it is a club that looks to win trophies season in, season out and it is a big opportunity for me to be a part of that.
"Opportunities like this, you can't turn down."
Cahill told Wanderers' official website, www.bwfc.co.uk: "This is the right move for me at the right time and I would like to thank everyone at Bolton because I've had a great four years at the football club.
"My spell with Wanderers has enabled me to break into the England squad, and I would particularly like to thank the fans for their support along the way."
Despite being part of a Bolton defence among the worst in the Premier League this season, Cahill has performed well alongside Chelsea captain John Terry at international level.
There were no shortage of admirers for the defender, with Arsenal seeing a bid rejected last summer and Tottenham also going close to landing him.
But Chelsea were the only serious January transfer window bidders, with Bolton opting to cash in on a player in the final six months of his contract.
A fee was agreed at the end of last month but negotiations with the player immediately hit a snag when Villas-Boas revealed club and player were "miles apart" in terms of Cahill's salary.
Reports suggested that gap was £30,000, with Chelsea determined not to be held to ransom as they seek to slash their overall wage budget in the era of Financial Fair Play.
Villas-Boas last week refused to criticise Cahill or his representatives for the delay, saying: "It's part of negotiation."
The Chelsea boss has previously said he is looking to sign one more player in the transfer market, probably a striker, although he has since suggested Cahill may be the only arrival.
Speaking about Cahill's impending arrival on Saturday evening, Villas-Boas said: "He has good technical abilities which is important in the way we want to play and to implement our philosophy.
"Our passing philosophy in building from the back. He has speed of anticipation, is an English international of course.
"Competition will be tight for him but we brought him in to become better as a team."
Cahill arrival may hasten the departure of Alex, who is wanted by QPR, while two of Chelsea's youngsters could complete loan moves today with Josh McEachran and Patrick van Aanholt using Twitter to confirm they were heading to Swansea and Vitesse Arnhem, respectively.
Fellow 18-year-old Romelu Lukaku has also expressed an interest in going out on loan next season.
The striker, who has only played seven times for Chelsea since arriving from Anderlecht in August, must stay where he is for now as FIFA rules forbid players representing three clubs in a single campaign.
But Lukaku told Belga news agency: "If my situation at Chelsea does not evolve between now and the end of the season, it may be better to be loaned out for a season."
Lukaku is unlikely to dislodge Fernando Torres while Didier Drogba is at the African Nations Cup, with the Spaniard beginning to find his form.
He has still not scored in almost three months and assistant coach Steve Holland told Chelsea TV: "We do a lot of finishing as part of the sessions anyway but he is doing extra at the end of every session during the week.
"His finishing is looking very good in training, the ball is flying in."
Team-mate Oriol Romeu has claimed Torres' recent performances have proven his critics wrong.
"People used to say that if he doesn't score then he is not playing good, but that is not true," Romeu said of the £50million man, who has 11 assists this season. "He is playing good and he helped us to get the goals."