Musonda joined the Blues in 2012 as one of the most sought after prospects in European football due to his exploits in the esteemed Anderlecht academy.
The son of former Zambia midfielder Charles Musonda was tipped to become a star for the Blues but has featured just seven times for the first-team since graduating from the development side in 2016.
After showcasing his talent in a temporary switch with LaLiga side Real Betis, the Belgium youth international was snapped up by Celtic boss Brendan Rodgers - who's been lauded his development of young talent.
However, the 21-year-old started just two league games since moving to the Scottish top-flight in January, which Rodgers confirmed prompted the Blues decision.
"I met with Chelsea on Monday after our game [against Aberdeen] on Sunday," Rodgers confirmed with Sky Sports. "In Charly's contract there was a review at the end of the season, whether they wanted to take him back or however it was.
"The idea for Charly was to come and play as many games as he possibly could, and let's review it at the end of the season. Between us both, we are thinking that he may not get the games that they would like him to get for next season.
"When I bring in young players, my job is to give them the environment and as much game time as we possibly can. He is a terrific young player but the level the team has been playing at, it has been difficult at times for Charly to get in.
"But there is no doubt he is a talent and I am sure that next year he will go on and hopefully get the games he wants. He was a joy to work with, a really good boy who wanted to learn, but he is not 18/19. He is at an age where he needs to be playing every week and, unfortunately, I couldn't promise him that."