have been banned from signing players in the next two transfer windows for breaching rules in relation to youth players, Fifa has announced .
The Premier League club
They have also been fined £460,000, while the Football Association (FA) has been fined £390,000.
It comes following a Fifa investigation into Chelsea's signing of foreign under-18 players, including former striker Bertrand Traore.
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The world governing body says it found breaches in 29 cases.
The FA has been told it must "address the situation" regarding the international transfer and registration of minors.
A spokesperson for English football's governing body said it had "co-operated fully" with the investigations and had "raised some concerns" regarding Fifa's disciplinary processes.
A statement said: "The FA intends to appeal against the decision. We will, however, continue to work with Fifa and Chelsea in a constructive manner to address the issues which are raised by this case."
How did this come about?
Based on documents from Football Leaks, French website Mediapart claimed in November that 19 Chelsea signings had been looked at in a three-year-long investigation.
Mediapart alleged that 14 of those signings were under the age of 18.
It was first reported in September 2017 that Chelsea
Burkino Faso international Traore - who now plays for Ligue 1 club Lyon - signed his first professional contract at Chelsea in 2013 at the age of 18 but was not registered until January 2014.
Mediapart claimed Fifa found evidence that Chelsea had misled them over the dates, while Traore was found to have made 25 appearances for the Blues (under-16, under-18 and first team) despite not being registered by the FA.
Chelsea admitted they paid his mother £155,000, as well as a further £13,000 to the club she chaired - AJE Bobo-Dioulasso - in April 2011 to allow them first refusal over his signature.
That deal, it is alleged, was for four and a half years, despite the limit for under-18s being three years.
In addition, it is also claimed Chelsea paid for Traore to attend the £20,000-a-year Whitgift School in Surrey.
In a statement in November, Chelsea said it had "fully co-operated with Fifa". The club also said it had "provided comprehensive evidence demonstrating its compliance with the applicable Fifa regulations".
Real Madrid and Atletico Madrid both received bans for breaching rules over the signing of minors in early 2016, while fellow Spanish club Barcelona were given a 14-month ban after breaking rules for signing international under-18s in 2014.
However, a Barcelona appeal saw their punishment pushed back a year, allowing the club to sign Luis Suarez, Ivan Rakitic, Jeremy Mathieu, Claudio Bravo and Marc-Andre
What are Fifa's rules?
Fifa bans the transfer of under-18s to different countries unless they meet strict criteria. It brought in the rules to help protect children from exploitation and trafficking.
Under-18s can only be transferred abroad if:
- The player's parents move to the country in which the new club is located for non-footballing reasons.
- Both clubs are in the European Union or European Economic Area and the player is aged between 16 and 18. Even then, the buying club must meet more criteria relating to education, training, living conditions and support.
- They live within 100km of the club.