The 40-year-old goalkeeper made the short trip across west London after turning down a new contract at Fulham and will provide competition for Petr Cech.
|9/4||Chelsea are 9/4 with Coral to win the Premier League
"It's a phenomenal club. It's one of the biggest and best clubs in the world, and it's an honour to sign for Chelsea. I didn't take much convincing to come here," he told the official club website.
"There were other interests but once I knew Chelsea was interested it was very much the case that I wanted to try and make it happen. I'm very fortunate and delighted to be sitting here today.
"It has an unbelievable manager and an unbelievable squad of players and it's very exciting."
Despite knowing he will not be first choice at Stamford Bridge, Schwarzer does not intend to warm the bench all season and will aim to build some healthy competition for Cech.
"Obviously Petr is a fantastic goalkeeper and the number one goalkeeper at Chelsea but I am here to help push him along, he will hopefully push me along and help the younger keepers at the club as well. I'm very excited of the challenges ahead," he told the club's official website.
Schwarzer, who has 108 caps for his country, also revealed his ambitions to continue representing Australia with hopes that he will be able to play in the 2014 World Cup.
"I still have a lot of aspirations to play for my country," he added.
"I want to play another World Cup, we've just qualified for Brazil and I want to continue to play at the highest level for as long as possible."