De Bruyne found there was no room for him in Chelsea's plans 18 months ago, after he signed from Genk and was swiftly loaned out to Werder Bremen for the 2012-13 campaign.
And despite Jose Mourinho affording him the chance to win him over this season, De Bruyne has been a peripheral figure around the first-team squad.
Chelsea said in a statement: "Kevin De Bruyne has today (Saturday) completed a move to Wolfsburg.
"The Belgian joins the Bundesliga club having made five starts for Chelsea, with a further four appearances as a substitute."
De Bruyne, 22, scored 10 goals in 34 appearances for Bremen last season, earning himself a strong reputation in the Bundesliga.
Wolfsburg announced he has signed a five-and-a-half-year contract after passing a medical.
De Bruyne said: "For me it was clear from the start that Wolfsburg would be the first people to talk to when Chelsea said I could go.
"I am very pleased that my transfer has come about.
"I want to play my part in ensuring we continue to be successful and return to international business (in European competitions)."
Wolfsburg stand fifth in the German top flight, three points adrift of Borussia Monchengladbach in third place, the final Champions League position.
The arrival of Nemanja Matic at Chelsea from Benfica effectively ended any hope De Bruyne had of winning over Mourinho, who also has the likes of Eden Hazard, Oscar, Frank Lampard, John Obi Mikel, Willian, Juan Mata and Ramires as midfield options.
German reports have suggested Wolfsburg are paying around 20million euros (£16.7million) for De Bruyne, although neither club has confirmed the price involved.
Mourinho recently said Chelsea would look to sell for "a very positive amount". De Bruyne moved to Stamford Bridge for a fee of around £7million.
Wolfsburg head coach Dieter Hecking said: "Kevin is a player with outstanding qualities. I am very happy he has chosen Wolfsburg. From our first talks, I had a good feeling. Kevin is convinced by our plan."