The Croatia international penned his deal with the Reds to become the third Southampton player to move to Anfield this summer following striker Rickie Lambert and midfielder Adam Lallana.
A Liverpool statement read: “Liverpool Football Club are delighted to announce the signing of defender Dejan Lovren from Southampton.
“The 25-year-old Croatian international today put pen to paper on a long-term deal with the Reds after completing his medical.”
Lovren will jet out to the United States to join up with his new team-mates on their pre-season tour.
“This is a very important signing for us and I’m delighted it’s completed so Dejan can join up with us on our US tour,” Liverpool manager Brendan Rodgers said.
“He is a commanding and powerful presence and clearly has leadership skills, which is important; he fits the profile of player we are looking for.
“He is still relatively young, so his peak years are ahead of him and I believe he will improve and progress even further with us.”
Lovren said: “It’s a dream come true. I’m happy and glad to be here; I’m proud and can’t wait to start.
“I’m a player that will give 100% and I want to show that to the supporters because they deserve to see players who give 100%. I know it is going to be something special to play in front of the fans at Anfield and I can’t wait.”
The capture of Lovren came as a welcome tonic to Rodgers after Loic Remy’s proposed move to Anfield broke down due to concerns over the player’s medical condition.
Meanwhile, Arsenal are expected to tie up a £16m (€20.2m) deal for versatile right-back Calum Chambers today.
The capture of Chambers will make it two signings in two days for Arsenal after the Gunners yesterday announced the signing of Colombia goalkeeper David Ospina from Nice on a long-term contract.
The 25-year-old, who impressed as Colombia reached the quarter-finals of the World Cup in Brazil, has moved to the Emirates for an undisclosed fee.
Gunners manager Arsene Wenger said: “David Ospina is an excellent goalkeeper, with good experience and a proven record of performing with Nice and Colombia.
“He will add strength to our squad and we are very pleased that he will be joining us.”
Elsewhere, Roma coach Rudi Garcia has told Manchester United they will have to stump up €100m if they want to sign Kevin Strootman.
New United boss Louis van Gaal said on Friday he will monitor Strootman’s recovery from a serious knee injury before deciding whether to bid for the midfielder.
Garcia recently vowed that Strootman would remain at Roma this season, but just to make his point perfectly clear, he said that a huge fee would be required for the Italian club to even consider letting the midfielder go.
“What can I say about the rumours [about Strootman joining United]...” Garcia pondered with a smile after Roma’s 3-2 friendly defeat to United on Saturday.
“Maybe after a three-digit offer [€100m], then we will sit down and think about it.”