Sturridge goes straight into the squad to face Wolves on Wednesday after seeing his first-team opportunities limited at Stamford Bridge.
Coyle is delighted to have the 21-year-old on board after missing out in his pursuit of Arsenal's Carlos Vela, who opted to join West Brom.
He said: "I am really pleased to have Daniel with us.
"He is a terrific young talent and one of the most exciting strikers in the country. We are all looking forward to working with him."