Chelsea failed with an attempt to sign Olise last summer after activating a £35 million release clause in his deal with Palace.
Olise opted to remain at Selhurst Park for another season but Chelsea retained their interest and made a fresh move to sign him this month.
Chelsea had been granted permission by Palace to hold talks with Olise and were ready to activate his release clause, which had increased to £60m after he signed a new contract last August.
However, Olise rejected Chelsea for a second time, as well as a late approach from Manchester United, in order to join Bayern.
According to The Telegraph, Olise was persuaded to join Bayern following talks with their new head coach, Vincent Kompany, who replaced Thomas Tuchel last month.
The report adds that the prospect of playing Champions League football was also a factor behind Olise’s decision – something which both Chelsea and United are unable to immediately offer.
However, Kompany is said to have played a key role in convincing Olise with his plans to improve Bayern’s style of play.
Meanwhile, former Palace midfielder, Darren Ambrose, claims the club have already earmarked a replacement for Olise.
‘I have reached out to one of my sources at Crystal Palace,’ Ambrose told talkSPORT at the weekend.
‘They said the club has a replacement in mind who potentially can be better than Olise in the long-run.’
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