Thiago Alcantara is joining Liverpool after ending his seven-year stint at European champions Bayern Munich.
The Reds will reportedly pay £27 million ($A47.7m) for the Spain international, who has agreed a four-year deal.
"I can confirm that Bayern have reached a final agreement with Liverpool," Bayern chairman Karl-Heinz Rummenigge told Bild Live.
"It was Thiago's wish to do something different towards the end of his career."
The midfielder left Barcelona for the Bundesliga in 2013, winning seven consecutive league titles with Bayern capped off by the treble in 2020 highlighted by their Champions League triumph last month.
His contract with the Bavarian giants was due to expire at the end of the 2020-21 season.
Premier League champions Liverpool had been linked with Thiago all summer and last week manager Jurgen Klopp reaffirmed that he was a fan of the 29-year-old.
"It is nice that we are linked with him but that is pretty much it really," Klopp said.
"It is because he is a good player and Liverpool is a big club, so that is nice."
Thiago is Liverpool's second signing of the transfer window after they brought in defender Kostas Tsimikas from Olympiakos last month.