In March 2004 by a 995-226 vote, residents approved a change in municipal status from a village into a city. Residents no longer pay property taxes to adjacent Lima and Sylvan townships as they had under the village government. The city provides all services formerly provided by both village and township governments.

According to the United States Census Bureau, the city has a total area of 3.68 square miles (9.53 km²), of which 3.63 square miles (9.40 km²) is land and 0.05 square miles (0.13 km²) is water.

This climatic region is typified by large seasonal temperature differences, with warm to hot (and often humid) summers and cold (sometimes severely cold) winters. According to the Köppen Climate Classification system, Chelsea has a humid continental climate, abbreviated "Dfb" on climate maps.

As of the census of 2010, there were 4,944 people, 2,224 households, and 1,284 families residing in the city. The population density was 1,362.0 inhabitants per square mile (525.9/km²). There were 2,436 housing units at an average density of 671.1 per square mile (259.1/km²). The racial makeup of the city was 96.1% White, 0.4% African American, 0.3% Native American, 1.1% Asian, 0.6% from other races, and 1.5% from two or more races. Hispanic or Latino of any race were 2.5% of the population.

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