The 22-year-old Belgian international has fallen out of favour at Stamford Bridge under Jose Mourinho, and has been linked with a number of clubs including Manchester United, Atletico Madrid, Malaga, Borussia Dortmund, Werder Bremen and Schalke.
But Wolfsburg have reportedly won the race after reaching an agreement with the Blues.
The Belgium winger wants to play regularly to cement his place in his national team's World Cup squad.
He was warned by national team boss Marc Wilmots that players must be playing consistently for their clubs to be considered for selection.
He has not started a Premier League game since August, his only two starts of the season came in the campaign's opening month.
With the likes of Eden Hazard, Oscar, Andre Schurrle, Juan Mata and Ramires for competition, de Bruyne has found first-team opportunities difficult to come by in a Stamford Bridge midfield packed with talent.
De Bruyne spent last season on loan at Werder Bremen but returned to Chelsea last summer hoping to make a case for regular inclusion.