Enzo Maresca's side were in danger of an embarrassing loss at the Tofiq Bahramov Stadium in Baku after falling behind in the first half.
Estevao Willian gave Chelsea an early lead, but Leandro Andrade equalised before Marko Jankovic converted a penalty to give the Azerbaijani minnows hope of a famous upset.
Alejandro Garnacho came off the bench to bail out the Blues with his composed finish after the interval.
Both sides have seven points from their first four matches in the league phase, leaving them in contention for the top eight finish that secures automatic qualification for the last 16.
While two-time European champions Chelsea have spent over £1.5 billion on new signings in the last three seasons, Qarabag's total transfer outlay since 2020 is less than £7 million.
Mockingly nicknamed "carrier bag" on their disappointing debut in UCL group stage eight years ago, Qarabag are outstanding this season.