Although no financial details of the transfer was released, media reports suggest Shanghai paid 60 million euros ($62.63 million) for Oscar.
A club statement read: “Chelsea Football Club and Shanghai SIPG have agreed terms for the permanent transfer of Oscar.
“The 25-year-old will join the Chinese Super League team at the beginning of the January transfer window.”
The 25-year-old Oscar, who will join compatriots Hulk and Elkeson at Shanghai, lifted the Premier League, League Cup and Europa League during his four-and-a-half-year spell at Chelsea.
($1 = 0.9579 euros)