Essien swaps Chelsea for Real
Ghanaian midfielder Essien, who has struggled for form at Stamford Bridge in recent seasons, will re-join former Chelsea manager Jose Mourinho at the Liga champions.
Essien's arrival at the Santiago Bernabeu on a season-long loan is likely to prompt the departure of Lassana Diarra to Anzhi Makhachkhala, with Russian transfer window still open until Thursday.
Promoted club West Ham United were active on Friday, bringing Yossi Benayoun back to Upton Park on a season loan from Chelsea.
Sam Allardyce's team reportedly failed in their attempts to lure another West Ham old boy, Joe Cole, back from Liverpool.
West Bromwich Albion brought in Macedonia defender Goran Popov on a season loan from Dynamo Kiev, with scope for a permanent transfer.
"Goran is an established, experienced left-back who is tall, powerful, good on the ball and likes to get forward," West Brom manager Steve Clarke said.
"I'm sure he will settle in really well with us in the Premier League."
Aston Villa, who have struggled early in the Premier League season under new manager Paul Lambert, moved for Genk striker Christian Benteke.
Villas also sealed a permanent deal for promising midfielder Ashley Westwood from League One side Crewe Alexandria.
Stoke City followed up the recruitment of Charlie Adam from Liverpool by completing moves for Maurice Edu and Steven N'Zonzi, the latter signing from Blackburn Rovers for a reported fee of 3.5 million pounds.
After losing both Moussa Dembele and Clint Dempsey, Fulham shored up their midfield with Iran international Ashkan Dejagah from Wolfsburg, but missed out on Twente's Chris David and Lyon fullback Michel Bastos.
Dnipro midfielder Derek Boateng has also claimed a proposed move to the west London club fell through.
Norwich City secured the services of young striker Harry Kane on a season loan from Tottenham Hotspur, while Everton captured 17-year-old winger Matthew Kennedy from Kilmarnock.
Everton are also expected to receive FIFA clearance over a loan move for Club Bruges midfielder Vadis Odjidja-Ofoe.
In Europe, Fiorentina responded to the disappointment of Dimitar Berbatov's late rejection by signing veteran striker Luca Toni from Al Nasr of the United Arab Emirates.
Toni, 35, will be entering his second spell with the Tuscan club, which he left for Bayern Munich as a World Cup winner in 2007.
Finally, Fiorentina's Serie A rivals Bologna completed a loan move for Genoa striker Alberto Gilardino.