Financial details were not disclosed but British media said Chelsea will pay 115 million pounds for Caicedo, eclipsing the 106 million pounds record fee the London club paid to sign Argentina midfielder Enzo Fernandez from Benfica in January.
"I am so happy to join Chelsea! I am so excited to be here at this big club and I didn't have to think twice when Chelsea called me, I just knew I wanted to sign for the club," Caicedo said in a club statement.
"It's a dream come true to be here and I can't wait to get started with the team."
Caicedo still had four years to run on his Brighton contract but had told the club he wished to leave. He was denied a move in January when Arsenal came calling and signed a contract extension in March.
Caicedo was also the subject of a close season tug-of-war between Chelsea and Liverpool, whose manager Juergen Klopp confirmed last week that the Merseyside club had reached an agreement with Brighton over his transfer.
Chelsea had several bids for Caicedo rejected before Liverpool swooped in with their offer but the Ecuadorean decided to move to the west London club managed by Mauricio Pochettino.
Chelsea's coup in signing Caicedo means they have spent over $1 billion in player transfer fees since the new ownership led by Todd Boehly and Clearlake Capital completed their takeover of the club in May 2022.
"Moises expressed a strong desire to move on and at that point, it was crucial our valuation was met in full," Brighton chairman Tony Bloom said.
'TOP MIDFIELDER'
Caicedo signed for Brighton in February 2021 for a reported 4.5 million pounds and was loaned to Belgian club Beerschot in August that year. He was recalled to Brighton in January 2022 after 14 appearances in Belgium.
He made his Premier League debut in April last year and scored his first Brighton goal against Manchester United in May.
Last term, under Roberto De Zerbi, Caicedo impressed in Brighton's midfield, making 37 league appearances and playing a key role alongside Alexis Mac Allister, the Argentina World Cup winner who moved to Liverpool earlier in the window.
"Chelsea are getting one of the top midfielders in the world. Moises has been one of our exceptional players over the past 18 months," Brighton technical director David Weir said.
Caicedo is one of several close-season recruits for Chelsea, who are attempting to rebuild their team with a radical overhaul after a 12th-placed finish in the Premier League last season.
As many as 12 players have left Chelsea on permanent deals while Caicedo joins other close-season recruits such as Christopher Nkunku, Axel Disasi, Nicolas Jackson, Lesley Ugochukwu, goalkeeper Robert Sanchez and Angelo.
Chelsea began the campaign with a 1-1 home draw with Liverpool at the weekend and next visit West Ham United on Sunday.
