The Ivorian had been in talks with Juventus for weeks before opting for Bergamo instead, with Atalanta tabling an offer that beat the Turin club's proposal.
According to Gazzetta dello Sport, Kessié has signed a three-year deal worth around €4m including bonuses, with an option for a fourth season. Juventus, constrained partly by UEFA settlement agreement financial parameters, had been unable to go beyond a two-year contract worth €3.5m with an option.
Juve sporting director Giovanni Carnevali suggested Kessié's heart may never have been fully in a move to Turin.
"With Kessié it seemed like it could get done because we'd reached what he was asking for, but perhaps his desire to come to a top club wasn't really that strong. Whoever comes here needs to have the pride to wear the Juventus shirt," Carnevali said. The collapse leaves Juventus needing to move quickly on alternative midfield targets.
That search has already begun: the club has asked Tottenham about the availability of Senegal international Pape Matar Sarr on loan, with talks already under way and the player understood to have given a preliminary green light to the move. Chelsea's Dário Essugo and Yves Bissouma remain names in the background.
The need has been sharpened further by a fresh injury setback for Khéphren Thuram, who is sidelined again with a knee problem and due to see a specialist in Lyon, leaving head coach Luciano Spalletti short of options in midfield with Weston McKennie also carrying a knock.
Atalanta, meanwhile, are far from finished themselves. Sky Sport report the Bergamo club have opened contacts for winger Samuel Mbangula, who left Juventus for Werder Bremen only last summer.
The Belgium Under-21 international would represent Atalanta's second major midfield and attacking addition of the closing days of the window, following the lightning-quick capture of Kessié, as the club continues to strengthen a squad already competing on multiple fronts this season.