The 19-year-old, who was a regular for England U20s as they won the World Cup earlier this summer, lit up two of the Blues' pre-season games with terrific long-range goals.
However, he found himself back in David Unsworth's U23s setup instead ofthe squad for last week's Europa League qualifier against Ružomberok, suggesting that Ronald Koeman doesn't feel as though Dowell is quite ready to start at first-team level on a regular basis.
Dowell looks now to have secured an opportunity to get valuable experience in the Championship with Forest.
“The paperwork is being completed, it is just the formalities that need to be finalised," said Forest boss Mark Warburton after Dowell trained with his squad for the first time. "But we are delighted to welcome him to the club.”
“He brings quality, he is coming from a top Premier League club, he has international experience and had a very good summer with England, at the Under-20 World Cup.
“He is a young, talented player and we are very much looking forward to seeing him develop and contribute. He has technical excellence, he is comfortable on the ball and can play in a variety of positions. He has flexibility and a hunger and a passion when he plays."
Update: The loan deal was confirmed on Thursday 3 August.