The Italian was handed a caretaker role following the sacking of Andre Villas-Boas in March, and went on to lead the club to a FA Cup win and their first ever Champions League triumph.
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Reports had circulated that, despite Di Matteo’s achievements, the recently-resigned Barcelona boss Pep Guardiola was still top of owner Roman Abramovich’s wish-list, but the Russian’s approach was rebuffed, leaving the former West Brom boss the chance to continue his reign.
And Chelsea's chief executive, Ron Gourlay, spoke of his delight at competing the signing of the man he feels is perfect for the job, telling the club’s official website: "Roberto's quality was clear for all to see when he galvanised the squad last season and helped the club make history, and the owner and board are very pleased he will be continuing his good work," Gourlay told the club's official website.
"We all believed he was a young coach with much to offer when we first asked him to take charge of team affairs in March and the manner in which he worked with us, the players and all the staff, and the success that followed, made him the clear choice when it came to selecting the person to take us forward in the seasons to come.
"We will be working closely with Roberto in the weeks ahead, some exciting signings have already been made and Roberto has had input into those.
"Although he has set the bar very high in the short time he has been in charge, we know that Roberto is the right man to lead Chelsea onto further success."
Di Matteo spoke of his own delight, but quickly focussed on next season’s challenge now his short-term future with the club has been resolved.
"I'm obviously delighted to have been appointed as manager and first-team coach," he added.
"We all achieved incredible success last season that made history for this great club. Our aim is to continue building on that and I'm already planning and looking forward to the squad's return for pre-season."
Chelsea have already confirmed the signing of midfielder Eden Hazard and Marko Marin, from Lille and Werder Bremen respectively, ahead of pre-season and are reportedly close to sealing a £38 million move for Porto striker Hulk.