The 21-year-old has been at Stamford Bridge for two years but after an injury-hit campaign under Rafa Benitez, he moves to the Mestalla to work with Miroslav Djukic in La Liga.
The former Barcelona youngster appeared nine times for the Blues last year before injuries disrupted the second half of his campaign.
New manager Jose Mourinho has already signed Andre Schurrle and Marco van Ginkel, while adding veteran goalkeeper Mark Schwarzer, as he continues to shape the squad to his liking. Romeu was signed by Andre Villas-Boas in the summer of 2011 and has made 33 appearances in two seasons, scoring one goal.
He will become new Valencia manager Miroslav Djukic's third signing of the summer, joining Javi Fuego and Michel at the Mestalla.