The European champions secured 40 per cent of the youngster's economic rights in 2010 following the sale of former-Chelsea playmaker Deco to Fluminense.
That deal gave them first-refusal on the 18-year-old should any other club submit a bid. Juventus and Manchester City have monitored the Brazilian starlet in the past, but Napoli's £4.5m offer is believed to have prompted Chelsea into the move.
Representatives from Stamford Bridge travelled to Rio De Janeiro this week, and according to the report a deal is thought to be confirmed early next week after Fluminense hope to have won the Brasileirao Championship.
Wallace is a Brazil under-20 international and played with fellow Chelsea recruit Lucas Piazon for the Brazil under-17's at the 2011 World Cup in Mexico.
The youngster is set to join a rapidly growing Brazilian contingent at Chelsea - with Oscar, David Luiz, Ramires and Piazon already at Stamford Bridge.
The Daily Mail reports Wallace could link up with the Blues squad in January, but an immediate loan back to Fluminense has also been discussed.
The 18-year-old is an attacking right-back, and gets forward well to deliver pinpoint crosses, and his coach, Abel Braga, clearly thinks he's destined to be a top player.
"This kid has an extraordinary future ahead of him," said Braga. "In the attacking third of the field, his level of crossing is superior."