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The LaLiga giants were thought to be the Spaniard’s preferred destination this summer but on Thursday night he put pen to paper on a one-year extension, which featured a pay rise to £150,000-a-week.
“I am really happy to extend my stay at Chelsea, my home,” he told the club website.
“It is almost 10 years since I first arrived and joined the club so I really feel the love and I am really excited for the new project we have in our hands.
“I would like to say thank you to Mr Todd and Mr Behdad for giving me the opportunity to keep my journey at this amazing club and I am really looking forward to continuing our adventure. I am a really proud captain and I hope we can share many good memories together.”
Chelsea bosses paid tribute to Azpilicueta after he committed his future to the club.
Co-controlling owners Behdad Eghbali and Jose E. Feliciano said: “Cesar is a world-class leader on and off the pitch. He’s a Chelsea legend and exemplifies so many of the qualities and values as a player and a person we aspire to.
“We couldn’t be more excited for Cesar to be at Chelsea under our ownership as we continue to work to build a champion squad.”
Todd Boehly added: “We are so happy that Cesar is staying at Chelsea for a minimum of two more years. We are thrilled with our captain showing his exemplary commitment and leadership yet again. There is still so much to do together.”