Chelsea say the obligation to buy will be triggered by conditions likely tied to the number of appearances the 22-year-old makes for Villa next season, with the Argentine having already agreed a four-year contract at Villa Park. The exact terms have not been disclosed, but Chelsea believe they are easily reachable and that the club will ultimately recoup their original £43m valuation of the player.
Aston Villa manager Unai Emery said he was delighted to bring in the winger.
"He is so talented, young and he showed us his wish to help our project. We are really happy," he said.
Garnacho's departure from Stamford Bridge follows Chelsea's signing of Morgan Rogers for a club-record £117m fee from Villa on Tuesday, with the winger becoming Villa's fourth signing of the summer after the earlier arrivals of Johan Manzambi, Joao Gomes and Modou Keba Cisse. Villa's outgoing business this summer has also been considerable, with the club banking close to £200m in total from the sales of Youri Tielemans, Donyell Malen, Enzo Barrenechea and Lewis Dobbin.
Chelsea had been keen to move Garnacho on despite signing him only last September in a £40m deal from Manchester United, who are due 10% of any eventual sale. His time at Stamford Bridge yielded just one Premier League goal, with the signing of Rogers and Sporting winger Geovany Quenda adding further pressure on the club to trim its squad.
The move gives Garnacho a fresh opportunity to rebuild his career in the Premier League after a difficult first season away from Old Trafford, joining a Villa side that continued to build under Emery last season and will be looking to push on again this year. His arrival adds further attacking depth and directness to a Villa squad already reshaped significantly this summer, both through incoming signings and the club's extensive outgoing business.
For Chelsea, the deal represents another step in a summer defined by significant squad turnover, with the club balancing high-profile incoming deals such as Rogers' arrival against the need to move on players who no longer fit within Xabi Alonso's plans.
Garnacho's departure follows a similar pattern to several other fringe players moved on by the club this summer, as Chelsea continue to reshape their squad following a period of heavy investment in recent transfer windows.