Manchester United made a late attempt to sign Tosin Adarabioyo but talks over a move to Chelsea were already too far advanced.
The 26-year old defender is expected to be confirmed as the first signing of Enzo Maresca's era over the next 48 hours.
He underwent medicals on Tuesday and agreed his deal with Chelsea pending the official expiry of his contract with Fulham.
United had expressed their interest in the free agent centre back months ago but it was Newcastle United who made the early running for his signature and came close to agreement.
Chelsea then made an offer last month before returning with an improved contract last weekend once they had chosen Maresca as their new manager.
Manchester United have failed in a last-gasp effort to hijack Chelsea's move for Tosin Adarabioyo
It comes amid a post-season review which could lead to Erik ten Hag's sacking by the club
Sir Jim Ratcliffe has a big decision to make over the Dutchman's Old Trafford future
Adarabioyo is set to become Chelsea's first signing under new manager Enzo Maresca
Maresca has worked with Adarabioyo previously at Manchester City and was a key figure behind the centre back's decision to join Chelsea - coupled with the added attraction of European football.
United returned to offer a concrete proposal at the weekend but Adarabioyo had already committed to joining up with Maresca.
The Old Trafford club are in the midst of an end of season review and still waiting to finalise some of their recruitment team but have identified certain targets and will look to get value in the market.
They want two centre backs, a midfielder and a striker but need to strengthen at full back also.
As a free agent with Premier League experience, Adarabioyo was identified as a player of interest but they have other options.
Nice's Jean-Clair Todibo and Everton's Jarrad Branthwaite are among the other defenders on their list.