Cuadrado has helped the Bianconeri win back-to-back Scudetti and Coppas de Italia as well as playing his part in their run to the Champions League final this season.
And after two fine seasons out on loan, Juve have made use of their option on the star to bring him back to Serie A on a permanent basis.
"Juventus announce that, after pre-contract terms were met, they have taken up the option to sign Juan Guillermo Cuadrado Bello from Chelsea," the club confirmed in a statement released on Monday.
"The fee in line with the agreement is €20 million payable in three installments from the coming 2017-18 season.
"Juventus and the player have in turn signed a contract until June 2020."
Cuadrado moved to Chelsea in February 2015 after impressing with Fiorentina.
The midfielder, however, failed to adapt to life in the Premier League, and made just 15 appearances in all competitions for the Blues before being loaned out to Juventus at the start of the 2015-16 season.
He has scored eight goals in 83 appearances for Massimiliano Allegri's side having been deemed surplus to requirements at Stamford Bridge.