The 18-year-old centre-back, the younger brother of Watford midfielder Nathaniel Chalobah, becomes Paul Hurst's first signing since becoming manager at Portman Road.
Chalobah joined Chelsea as a nine-year-old and has been a key figure in the club's successful youth team in recent years.
Hurst said: "He's at an age where people might question him as he's a bit young.
"There will be demands put on him that he might not have encountered in the past but from speaking to him I know he's hungry to succeed.
"I like players who maybe have a little bit of something to prove and in Trevoh's case, he's got a lot to prove. There's a lot of good publicity around him in terms of potential but he understands, and he wants to go out and deliver."
Chalobah won two FA Youth Cups and the Uefa Youth League at Stamford Bridge, as well as lifting the European Under-19 Championships on international duty with England last year.
He was rewarded with a place on the substitutes' bench on numerous occasions, including the FA Cup final in May.
Chalobah believes Championship side Ipswich offers him an opportunity to develop.
He said: "It's important for me, being a young age, that I come here to learn and grow as a player as the year goes on."
Chelsea are known for farming out players.
According to the club's website, there were 37 players loaned out during last season.
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