It will be a dry loan valid until next summer with no buy-out clause.
Kepa’s addition comes after Thibaut Courtois sustained an ACL injury in training, which is likely to sideline him for several months.
Despite having Andrey Lunin in their ranks, Los Blancos decided to invest in a new keeper.
Kepa was close to joining Bayern Munich, who had lined him up as a replacement for Yann Sommer.
However, he performed a U-turn by snubbing Bayern at the last moment after hearing about Madrid’s offer.
The 28-year-old has experienced a turbulent spell at Stamford Bridge, often being criticised for not living up to the tag of the most expensive goalkeeper in history.
However, Kepa redeemed himself last season, regaining the starting berth. The former Athletic Bilbao keeper kept nine clean sheets in 29 Premier League appearances.
Lunin featured in Madrid’s victory over Athletic Bilbao in their league opener, but Kepa is expected to take over in the next game against Almeria.
Brazilian centre-back Eder Militao has also ruptured his ACL during the game against Athletic Club and is at risk of missing months out of action.
Madrid will likely sign a replacement before the transfer window closes on September 1.
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