Derry has already tasted first-team football twice, coming off the bench in a 4-0 FA Cup fourth-round victory over Hull City back in February. His first Premier League start followed months later at Nottingham Forest, a night cut short when he needed a stretcher after colliding heads with an opponent.
The teenager, who joined from Crystal Palace last summer after scoring 19 goals in 23 appearances for the club's Under-18s, has been tipped as one of the brightest prospects to come through Chelsea's academy in recent years.
"It's a dream come true to commit my future to such a big club like Chelsea," Derry said after signing his deal. "I'm just so excited for what's to come.
"This last 12 months, I feel like a completely different player than when I first joined and that's credit to all the coaches I've worked with. They've played such a big part in helping me get better.
"Just having that little snippet of playing for the first team last season, I couldn't have thought of anywhere else I'd want to be for my future. It was a no-brainer."
The loan agreement with Sporting has not yet been formally completed, but a temporary move to Portugal is seen as the next step in Derry's development, offering regular senior football and potential European experience away from the pressure of a title-chasing Chelsea squad. He has already progressed through the club's Under-21 side, featuring in Premier League 2 and the UEFA Youth League.
Derry, the son of former player and manager Shaun Derry, has also represented England at Under-17 and Under-18 level, and scored in group games against Germany and the Netherlands at last summer's European Under-19 Championship.
Chelsea have built a reputation for sending promising young players out on loan to develop, and Sporting are considered a strong environment for Derry to continue his rise before a potential return to Stamford Bridge.