The 22-year-old made his first-team debut in a victory over Barcelona back in the 2021-22 season and has gone on to make 80 appearances for Celta across LaLiga, the Copa del Rey and the Europa League.
His involvement dipped notably towards the end of last season, playing just 161 minutes across three matches in the final eight rounds, despite having featured in 30 games and accumulating 1,606 minutes with two assists across the campaign as a whole.
Confirming the move in a statement, Celta said: "Hugo Sotelo will continue his footballing development at the Ciutat de Valencia, with the challenge of continuing his evolution while carrying with him the values of A Madroa. Celta wishes him every success in this new sporting adventure."
The loan represents Sotelo's first senior experience away from Vigo, having come through Celta's academy system from a young age. Levante's buy option is reportedly valued at around €3m for half of his federative rights, giving Celta the chance to retain a stake in any future sale should the midfielder impress at his new club. Sotelo will link up with Levante coach Luis Castro as the Valencia-based side prepare for the new campaign.
The move marks the first departure of Celta's summer transfer window, aside from players who reached the end of their contracts. On the incoming side, the club have already added Febas and Galán on free transfers as they continue to reshape their squad ahead of the new season.
For Sotelo, the switch offers a fresh opportunity to rebuild momentum after a season in which his role diminished significantly in its closing weeks. A regular under previous coaching set-ups, he will now look to establish himself under Castro at the Ciutat de Valencia, with Levante viewing the Spain Under-21 international as a player capable of taking control of their midfield going forward.
Sotelo's departure leaves Celta with one fewer academy graduate in their first-team plans, continuing a pattern in recent windows of allowing homegrown players regular football away from Balaidos when opportunities have narrowed at the club.
The Vigo side will hope the arrangement proves mutually beneficial, with the buy-back option ensuring they retain an interest in his development even after his exit.