The tie, the first leg of which will be played on March 23 or 24, will see star Denmark striker Pernille Harder -- the reigning UEFA player of the year -- come up against her former club after she left German champions Wolfsburg for Chelsea at the start of this season.
Chelsea have never gone beyond the semi-finals of the Champions League and lost to Wolfsburg at that stage in 2018.
Wolfsburg have twice won the competition but have lost three finals to Lyon in the last five seasons, including a 3-1 defeat in San Sebastian, Spain, last August.
If Wolfsburg win, they could end up facing German rivals Bayern Munich in the semi-finals. Bayern must first take on Swedish side Rosengard in the last eight.
Chelsea are due to be at home in the first leg against Wolfsburg, but it remains to be seen where that game will be played after men's Champions League matches between English and German clubs were moved to neutral venues due to Covid-19 travel restrictions.
In the other half of the draw holders Lyon look certain to meet PSG, who will face Sparta Prague in their last-16 second leg next week leading 5-0 from the first leg at home.
Lyon have won the Champions League a record seven times including in each of the past five seasons, and have seen off Juventus and Brondby to make the quarter-finals.
They have also been French champions in each of the last 14 seasons, but PSG are on course to break that particular run this time -- the Parisians are top of the French league by a point before going to Lyon this weekend.
Should Lyon make it to the semi-finals they could end up facing one of their former players.
Manchester City, whose side includes England's former Lyon star right-back Lucy Bronze, are on the same semi-final path but first take on Spanish champions Barcelona in the last eight.
This year's final is scheduled to be played in the Swedish city of Gothenburg on Sunday, May 16.
Standout matches today