The former Germany captain believes Jose Mourinho's long awaited Stamford Bridge return is a superb decision and expects the Blues to improve under his guidance.
Mourinho was confirmed as Chelsea's new manager following months of speculation, and Ballack, who was signed by Mourinho back in 2006, believes it is a great appointment for both parties.
"To have Jose Mourinho at Chelsea is a fantastic decision," he told Sky Sports. "He is a great character and a great coach. Even at his age he has had unbelievable success.
"To go back to a club like this, it is never a bad decision. Chelsea are a fantastic club - they won the Champions League last year and this year the Europa League.
"The money will be right for him, the fans love him, he has a lot of English supporters, even if they don't support Chelsea.
"Altogether it is a great package for him."
Ballack made more than 100 appearances for the West London side, scoring 17 goals.