The Blues were planning to add the Red Bull Salzburg director to their recruitment team.
Christoph Freund has confirmed he has decided against joining Chelsea.
The Premier League giants had reached a personal agreement with Freund earlier this week.
However, RB Salzburg revealed they had received no offer for the director, insisting he would remain at the Austrian club.
“As I have confirmed already, Chelsea were interested in me,” Freund explained. “When such a big club asks, it not only honours me and the work of FC Red Bull Salzburg, it is also of course a circumstance that entails personal consideration.
“But I’ve come to the conclusion that I’m in the best of hands with FC Red Bull Salzburg and that a change is out of the question for me.”
Widespread reports in English media claim the new statement has surprised Chelsea. The club were reportedly confident they can add Freund to their recruitment team as soon as this weekend.
Salzburg’s managing director Stephan Reiter added: “Christoph Freund has been doing excellent work for us for many years and only recently extended his contract until 2026. I can hereby confirm that he will remain sporting director of FC Red Bull Salzburg.
“Of course, he informed me about Chelsea’s interest in him and we exchanged ideas on a personal level and in good conversations.
“The fact is that he will remain our sporting director! We have not received any inquiries about a possible change.”
90min has claimed Monaco director Paul Mitchell is Chelsea’s next target for the role.