Southampton centre-back Virgil van Dijk will join Liverpool when the transfer window re-opens on January 1, 2018 in a world record Â£75m deal.
The Netherlands international had been expected to join the Reds last summer after he handed in a transfer request.
But a move fell through when Liverpool apologised for making an alleged illegal approach for the 26-year-old.
The fee is the most ever paid for a defender – Manchester City paid Â£52m to Monaco for Benjamin Mendy in July.
Van Dijk said in a statement he was “delighted and honoured” to sign for the Merseyside club and accepted he had had a “difficult last few months” at St Mary’s.
He was left out of Southampton’s squad for their 5-2 Premier League defeat by Tottenham on Tuesday, prompting speculation he was set to leave the club.
“Southampton have agreed a fee that will set a new world record for a defender,” the south coast club confirmed on Wednesday.
The player only signed a new six-year contract last year, having joined the Saints from Celtic for Â£13m in September 2015.
However, Liverpool’s interest in the summer prompted a transfer request from the player which saw him forced to train alone by manager Mauricio Pellegrino.
He returned to first team action in September, featuring in a win at Crystal Palace.
Van Dijk’s former club Celtic will benefit from the record transfer fee – the Scottish champions are understood to have had a 10% sell-on agreement on any future deal.
Though he will join the club on January 1, Van Dijk will not be able to register as a player until January 2 so will not be available for Liverpool’s trip to Burnley on Monday.
The Anfield club also announced he will wear the number four shirt.
The Van Dijk fee tops the Â£48m release clause the Reds have agreed for RB Leipzig midfielder Naby Keita, who will move to Anfield next summer.
Van Dijk said in a statement yesterday that he was ‘Proud to join one of biggest clubs in world.’
“Delighted and honoured to have agreed to become a Liverpool FC player. Today is a proud day for me and my family as I join one of the biggest clubs in world football.
“I can’t wait to pull on the famous red shirt for the first time in front of the Kop and will give everything I have to try and help this great club achieve something special in the years to come.
“I would also like to take this opportunity to say thank you to Les Reed, the board, manager, players, fans and everyone at Southampton.
“I will always be indebted to the club for giving me the opportunity to play in the Premier League and despite a difficult last few months, I have thoroughly enjoyed my time at Saints and have made friends for life at the club.”