The 21-year-old left-back, who has also signed a one-year contract extension with Chelsea, will spend 2021/22 in the Championship at Birmingham City.
Last season he played at AZ Alkmaar where he mostly featured in their second string and then at Den Haag where he made 17 first-team appearances.
A former captain of Ajax and the Netherlands at youth level, Castillo, who has also played in more attacking roles, joined Chelsea in 2016 and helped our Academy win the Under-18 Premier League and back-to-back FA Youth Cups.
With older age groups, he reached the UEFA Youth League final and scored in an EFL Trophy quarter-final win against Oxford United’s senior team.
Prior to last season’s loans in the Netherlands, Castillo spent the 2019/20 campaign back at Ajax where he helped their Under-21s finish fourth in the Dutch second division.
His next loan club, Birmingham, are managed by Lee Bowyer who moved there from Charlton in March.