The Brazil defender left for Paris Saint-Germain in June 2014 for £50million, a world record fee for a defender, but is ready to return to west London.
Chelsea have been frustrated in their search for a centre back, having had bids turned down for Alessio Romagnoli at AC Milan and Napoli’s Kalidou Koulibaly.
The Stamford Bridge outfit also considered exploring the loan market in a bid to strengthen their ranks.
But after being rebuffed when making initial enquiries about Luiz’s PSG team-mate Marquinhos last week, they begun talks over a deal for the Brazilian, despite initially being met with resistance.
Luiz, 29, was criticised after giving away a penalty in last week’s defeat to Monaco and was substituted by PSG’s new coach Unai Emery.
Chelsea are close to signing £23m Spanish left back Marcos Alonso from Fiorentina. He was due in London on Tuesday night for a medical.