The Colombia international is one of the game's most in-demand strikers after slamming home 47 goals in just 56 appearances for Atletico following his £35million move from Porto last summer.
He caught the eye of Chelsea following a virtuoso display in the European Super Cup between the two sides back in August, where he bagged a hat-trick in a 4-1 win for the Spanish side.
Chelsea are on the lookout for a target man following the departure of Didier Drogba last summer and it appears Falcao has moved to the top of their wanted list.
Despite spending nearly £80million on five players over the summer reports suggest Blues owner Roman Abramovich is ready to open his sizeable chequebook once more.
Falcao has a £46million release clause in his contract and a deal could be done as soon as January, with the European champions showing no signs of slowing their spending, despite the looming Financial Fair Play regulations.