Chelsea have agreed a €50m deal with Atalanta to sign Palestra.
Inter Milan had been hopeful of sealing a transfer, but the Blues appeared to have successfully hijacked it.
New manager, Xabi Alonso, is believed to be a key part of the deal.
Alonso views the 21-year-old as a versatile two-sided full-back, as he continues to bolster his squad ahead of his first season at Stamford Bridge.
Palestra is keen on the move to Chelsea and is now in negotiations over personal terms.
Inter unable to match Chelsea’s wage proposal, but Palestra still fits within the club’s incentive-driven structure.
The player was also offered to Arsenal and Liverpool as a move to England was explored this summer.
