Barkley has been widely expected to leave Goodison Park this summer after he rejected a new contract with his boyhood club last month.
Tottenham Hotspur had been most strongly linked with the 23-year-old for much of the transfer window, but Chelsea emerged as frontrunners for his signature in recent days.
Everton are understood to have agreed a fee of £30m plus add-ons for the England international, but Sky Sports News reports that he has now performed a remarkable U-turn.
Barkley reportedly travelled down to Chelsea's Cobham training complex to undergo his medical, only to change his mind midway through the medical and decide against joining the Premier League champions.
Barkley is now expected to return to Everton, despite manager Ronald Koeman saying earlier this summer that he "100%" expects the midfielder to leave Goodison Park.
Barkley has less than a year remaining on his contract with Everton.