The Ghanaian, 25, joins the Magpies on a four-year contract, just weeks after completing a season-long loan at St. James’ Park.
Atsu made 32 appearances for Rafael Benitez’s outfit in the Championship, scoring five times and assisting three other goals as the Magpies won the league to gain topflight promotion.
“We are happy to sign a good player,” Benitez told his club’s official website.
“He's shown us that he's a good professional and someone who is very keen to learn and improve.
“Christian has been a key part of our promotion campaign and he wants to help us to build something for the future.”
Newcastle insist they signed the player on an undisclosed fee, although media reports say Chelsea had slapped a £6.5 million price-tag on the attacker.
Atsu joined Chelsea from Portuguese giants Porto in 2013 but a lack of opportunity at Stamford Bridge saw him spend the last four seasons out on loan.