The midfielder has spent a number of weeks in contention to represent his country during the 16-nation tournament in Paris.
However, Ugochukwu was recently demoted to one of four reserve spots with head coach Thierry Henry showing preference to other players.
Ugochukwu has since remained with the squad as backup in the event that any injuries occur within the squad ahead of the beginning of the competition next week.
On Friday, though, Chelsea exercised their right to bring the 20-year-old back to club duties, rather than the player be left in limbo for at least another few days.
With the Olympic tournament not being regulated by FIFA, clubs have been able to prevent players from participating should they wish for them to have a break after the recent major competitions or instead feature in pre-season.
The FFF release statement
Revealing Chelsea's decision, the French Football Federation said: "Lesley Ugochukwu leaves the Olympic selection. The midfielder is leaving the French Olympic Team this Friday, July 19, and will not be among the reserves for the Paris 2024 Olympic tournament.
"Following a request from Chelsea FC, Lesley Ugochukwu will permanently leave the French Olympic football team and will no longer be available as a reserve."
Chelsea had allegedly previously stepped in to request that fellow French players Malo Gusto and Benoit Badiashile not attend the Games, while Enzo Fernandez publicly acknowledged that he had not been allowed to play for Argentina.
What is Chelsea's reasoning?
While Chelsea have not officially revealed their reasoning, there has been speculation regarding a potential loan switch for Ugochukwu.
A severe hamstring injury restricted him to six starts and nine substitute outings in 2023-24, the former Rennes man only regaining full fitness for the final week of the season.
Chelsea are now said to want to find a Premier League club for the youngster to feature on a regular basis, with game time likely to be limited should he remain at Stamford Bridge.
Moises Caicedo, Enzo Fernandez, Conor Gallagher, Kiernan Dewsbury-Hall, Romeo Lavia, Andrey Santos, Cesare Casadei and Carney Chukwuemeka are all options in midfield for new boss Enzo Maresca.