Oxlade-Chamberlain, 24, was in the final year of his contract at Arsenal and is believed to have been unhappy at his recent deployment in the right wing-back position.
Chelsea were heavily linked with a move for Oxlade-Chamberlain, but with Antonio Conte also likely to have used the player as a wing-back it was Liverpool who appealed most to the England international.
Oxlade-Chamberlain will be Liverpool’s fourth major signing of the transfer window following the arrivals of Mohamed Salah, Andrew Robertson and Dominic Solanke.
The Merseyside club have also agreed a deal to bring RB Leipzig midfielder Naby Keita to Anfield next summer for a club-record £48m.
The Ox will sign a six-year deal with the club and his £40m fee makes him Arsenal’s biggest ever sale.