The England international had been linked with a move to Anfield prior to the FIFA World Cup and will now join former Southampton team-mate Rickie Lambert at Liverpool.
He will have the opportunity to play European football for the first time on Merseyside and is the latest star man to leave Southampton following Lambert, former manager Mauricio Pochettino and left-back Luke Shaw, the latter having joined Manchester United on Friday.
After confirming the sale, Southampton claimed in a statement: "The fee received for Adam Lallana will allow the club to further develop the first-team squad for the 2014-15 season."
Lallana came through the youth system at Southampton before helping the south-coast club progress through the leagues and impress in the Premier League over the past two seasons.
He said: "I'm so excited for the next chapter of my career, coming to a special club like Liverpool. I'm quite humbled and I just can't wait to get started.
"Hopefully I can settle in quickly, and I will give it my best throughout the whole time I'm here.
"I hope I can add something to the team and hopefully we can win trophies while I'm here, because that's why I'm here - for success."
Liverpool boss Brendan Rodgers expressed his delight at the capture and has backed Lallana to make an impact on Merseyside.
Rodgers told the club's official website: "He has leadership skills and personal qualities that make him a special commodity and I am delighted we have acted decisively to make sure he is wearing a Liverpool shirt next season.
"Adam is aware there will be great competition for places at this club and he is hungry to improve further. We are confident he will fit perfectly with the culture we have at Liverpool.
"I'm excited about working with Adam and helping him to progress even further."
After spending eight seasons at St Mary's Stadium, Lallana's surge to prominence was rewarded with a call-up to Roy Hodgson's England squad for the World Cup in Brazil.
He played in each group game for his country as they crashed out of the group stage.
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