In a statement, Spain's industry ministry said the two companies had reached "an agreement to produce cars in the former Nissan factory in Barcelona's Zona Franca" industrial zone.
The Spanish carmaker confirmed the move saying it had reached a deal with Chery "to manufacture vehicles through a joint venture majority owned by Ebro", adding that the plant would produce Chery's Omoda brand vehicles.
No further details were available about the deal which will be signed in Madrid on Wednesday by Industry Minister Jordi Hereu and a Chery delegation in the presence of members of Catalonia's regional government.
The Spanish authorities had in recent days intimated a deal was imminent, but doubts lingered over the Chinese group's willingness to go ahead, with reports suggesting it possibly preferred Italy.
"After months of negotiations we have been able to finalise the re-industrialisation of the Zona Franca with the agreement between Ebro and Chery to build thousands of vehicles at the former Nissan site," said Roger Torrent, the Catalan regional minister for business, on X.
Before it closed down in December 2021, the former Nissan site employed 3,000 workers. Part of the vast complex was sold off to motorcycle maker Silence but regional authorities have been looking for another investor.
Chery is the second Chinese carmaker to move into Europe after China's top electric carmaker BYD said in December it would build a factory in Hungary as it pushes ahead with plans to expand into Europe despite growing competition concerns.
Founded in 1997, Chery is a state-owned company which says it sold 1.88 million cars in 2023. It rose to popularity in China about 15 years ago with its small petrol-fuelled city cars aimed at the local market.
It has since moved into the electric vehicle (EV) market although it is not one of China's best-known players, even if it claims to be the biggest vehicle exporter.
Chery's move comes as tensions soar between Beijing and Brussels, as the EU steps up actions to defend European industry against growing threats from China and the United States.
In September, EU chief Ursula von der Leyen announced a probe into Chinese subsidies for electric cars, vowing to defend European industry from unfair competition.
And earlier this this month, Brussels opened a similar investigation into Chinese wind turbine suppliers over green tech subsidies.
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