The Welsh international is the Blades’ third signing of the day, following the arrivals of Derby County duo Jayden Bogle and Max Lowe.
Ampadu had been ready to stay at Stamford Bridge and fight for his place in Frank Lampard’s first team set-up, but the arrival of Thiago Silva will limit the Wales international’s chances of minutes, and the decision was taken to send him on loan to get regular playing time.
Speaking to the official website, Blades boss Chris Wilder said: “Ethan is an outstanding young player for Chelsea, and we’ve worked really hard to get his signature for the season.
“We need to thank Frank Lampard and the people at Chelsea for helping making this happen. We’ve got a good relationship with them and they know we’re going to take good care of him.
“It’s an important season for Ethan and playing in the Premier League for us is a good move for everyone. He brings a lot of qualities to the group and he’s someone we’ve tracked for two or three seasons.”
Ampadu impressed for Wales in their recent Nations League victories over Bulgaria and Finland and his national team head coach Ryan Giggs believes a temporary move away from Stamford Bridge could be hugely beneficial for the youngster.
“Thiago is a quality centre half and you can only learn from someone like that,” Giggs said. “I want all the players to be playing regularly, but that sometimes isn’t the case.
“It’s that balance over whether they’re at a top club and surrounded by top players and improving every day, but ultimately you need minutes on the pitch.
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“That’s a decision for Ethan. I’ve talked to him a lot about that. I think last year was maybe a little bit different as he had injuries.
“You could see from the game he played against Tottenham in the Champions League he was outstanding.
“Nothing fazes him, he’s a quality player, and he just needs to keep fit now.”