The deal will see the Blues handed an option to buy the striker outright for £32.5 million (€36m) upon the completion of a six-month loan, with a series of performance related bonuses being paid to Juventus on the basis of goals scored and appearances.
Higuain and Chelsea boss Maurizio Sarri have been pushing for a reunion since the Italian took the reins at Stamford Bridge and it appears now that the pair will finally get their wish after talks between the Premier League side and the Serie A champions.
The 31-year-old was left on the bench for Milan's Supercoppa Italiana loss to Juventus on Wednesday evening in Saudi Arabia, with Rossoneri boss Gennaro Gattuso attributing a fever to the forward's absence from the starting eleven.
Higuain had earlier missed a photo opportunity to receive treatment as talks continued behind the scenes, Milan director Leonardo having stayed in Italy to work on the San Siro side's transfer matters - Genoa's Krzysztof Piatek is the club's main target to replace the outgoing Higuain.
But while the Argentine's move to London is all but finalised, the deal will be paused until Alvaro Morata's future is solidified, as talks over a move away from Chelsea continue.
Atletico Madrid remain at the head of the pack for the Spaniard's signature as Sevilla have pulled out of the race, but have yet to come to an agreement over the cost of a proposed loan arrangement, with an option to buy and wage contributions still being thrashed out.
Chelsea are also looking to offload Michy Batshuayi – valued at £40m ($51m) – on a permanent basis, though the most interested party, Monaco, had been hoping only to secure the Belgian's services on loan.
Monaco have agreed a deal to take over Batshuayi's loan spell with Valencia , but his parent club are exploring their options and have offered the striker to a variety of clubs, with Everton interested in a move for the 25-year-old.
The Toffees' valuation of Batshuayi falls well short of Chelsea's asking price, however, as the Merseyside club look to sign their man for around £18m ($23m).
Chelsea are also looking to sign a replacement for Cesc Fabregas, now at Monaco, and are locked in talks with Zenit for Leandro Paredes for what might be their only other incoming signing in January.