Antonio Conte is eager to find new recruits before the Premier League season begins this weekend with the transfer window also shutting at the end of the month.
The Italian boss has made no secret of his need to add squad depth following the permanent and loan departures of a host of key players.
And Valencia right-back Cancelo could become the next arrival at Stamford Bridge.
Spanish publication Don Balon claim talks are progressing quickly and he could become a Chelsea player within hours.
Earlier today, Sky Sports journalist Kaveh Solhekol claimed the Blues had been scouting the 23-year-old and they are prepared to fork out £25million to sign him.
“Conte wants to sign at least one wing-back this summer,” Solhekol said.
“And one of the players he is interested in is Joao Cancelo, he’s a Valencia right-back who was scouted playing for Portugal at the European Under-21 Championships.
“And he’s been watched again during pre-season. Juventus and Spurs are also said to be interested. He’s valued at about £25m.”
The Portugal international remains under contract with Valencia until 2021.
Chelsea have only made one defensive signing this summer with Antonio Rudiger joining.
The Blues have been keen on signing Alex Sandro from Juventus but the Serie A champions are playing hardball over a deal and Conte has now turned to Cancelo to address his defensive concerns.