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Fernandez, who was named Young Player of the Tournament after helping Argentina win the 2022 World Cup, was strongly linked with Chelsea earlier in the transfer window before talks broke down.
However, the big-spending Blues went back in for him with the end of the window drawing closer, signing Fernandez to a long-term contract – rumoured to run until 2032 – with confirmation arriving an hour and a half after the transfer window closed.
Chelsea submitted the relevant paperwork in time and Benfica was first to announce details of the deal on its official website on Wednesday.
His arrival takes Chelsea's spending to a reported £288.5m (€328.5m) this month alone, with the midfielder becoming its eighth signing of the January transfer window.
Fernandez only joined Benfica from River Plate last year but has played a starring role since making that move, helping the Portuguese giant top its Champions League group.
He had looked likely to remain in Lisbon at least until the end of the season, but Chelsea revisited the deal with manager Graham Potter reportedly keen for midfield reinforcements.
The fee surpasses the previous Premier League transfer record, set by Jack Grealish's £100m switch from Aston Villa to Manchester City in 2021.
Fernandez could make his Chelsea debut against Fulham at Stamford Bridge on Saturday (AEDT), as the Blues look to climb the table after a poor run of form saw them drop to 10th position.
A dogged competitor with an eye for the magnificent, Fernandez featured in all seven of Argentina's games in Qatar, starting five of them after he came off the bench to net a superb goal against Mexico in the group stage.
Fernandez's ability on the ball, as well as his tenacity, will add a new facet to Potter's midfield options.
Only 11 players carried the ball further than Fernandez (1,239.7 metres) at the World Cup, while just 10 were involved in more shot-ending sequences than his 27.
Fernandez boasted a duel success rate of 58.8 per cent, winning 40 of his 68 engagements at the tournament.
He made just 17 league appearances during his short stint with Benfica, though he also featured in five group games in the Champions League.