Portuguese veteran Tiago has turned down lucrative offers from Monaco and Zenit St.Petersburg to sign a two-year contract with Chelsea, according to Diário de Notícias journalist Goncalo Lopes.
Chelsea fans are very familiar with the midfielder's talents thanks to a season on loan at Stamford Bridge more than a decade ago, which came under the leadership of current Blues boss Jose Mourinho.
The 33-year-old has chosen to link up with Mourinho once again after finishing five years with Atletico Madrid in style, winning La Liga and coming agonisingly close to making it a trophy double in the Champions League final.
Tiago's strong form in the final six months of that tremendous campaign for Atletico had three of Europe's top clubs calling for his services, but the chance to work with Mourinho again in the Premier League clearly proved too good to turn down.
Second signing of busy summer
Chelsea are widely expected to confirm Tiago as their second summer signing later this week, as the make-up of an improved Blues squad, which will leave Mourinho with no excuses not to deliver trophies next season.
Mourinho has already wrapped up a £30m deal for Spain star Cesc Fabregas and clearly thinks central midfield is an area of huge importance to Chelsea's title charge, choosing to add Tiago to options which already include January capture Nemanja Matic, another ex-Blue brought back to the Bridge over the last six months.
Enviable midfield mix
Tiago will help Chelsea compensate for the loss of Frank Lampard moving forward, providing competition to the likes of Matic and Ramires for a starting spot in a more withdrawn holding midfield role.
Chelsea have a fantastic array of talent in advanced areas but Mourinho clearly thinks he needs added steel and experience to cope with the demands of a gruelling campaign on three fronts, but Tiago's arrival likely means there's no room for Jon Obi Mikel next season.
Mikel was a peripheral figure last term and looks increasingly likely to join David Luiz in making a move after the World Cup, but don't expect Mourinho's summer spending spree to end with a two-year deal for Tiago.
Mourinho targets more from La Liga
Tiago could well end up being joined by two of his Atletico team-mates in the Premier League next season if Mourinho gets his way, with deals for Diego Costa and Filipe Luis in the pipeline.
Chelsea are all set to meet Costa's £32.5m buyout clause in search of the proven world-class predator they lacked so desperately last season, while Luis would be a direct replacement for Ashley Cole at left-back.
Mourinho's move for Tiago is merely the latest piece of a puzzle he hopes will result in Premier League domination next season, with a two-year contract to back his faith in a Portuguese international that has played in five major leagues and 58 times for his country.