The brother of Blues star Eden Hazard arrived at Stamford Bridge a year ago from Hungarian side FC Ujpest but has yet to feature for the first team.
Kylian will now continue his development back in his native Belgium, having made his senior debut in 2013 at second division side White Star Brussels.
"We warmly welcome Kylian to Cercle Brugge," sports director Francois Vitali told the official club website.
"He is a player with offensive qualities and we are convinced that Cercle Brugge is the best place for him to continue his career at the highest level."
Thierry Hazard, the father of the two Chelsea players, suggested earlier this month that Kylian looked likely to seal a loan move to Spain.