The 26-year-old, who has been capped 27 times by England, becomes Kenny Dalglish's fourth summer signing following the transfers of Jordan Henderson from Sunderland, Blackpool's Charlie Adam and the acquisition of Brazilian goalkeeper Alexander Doni, which was confirmed earlier on Friday.
Villa confirmed earlier this week that Downing had submitted a formal transfer request and he travelled to Liverpool to discuss terms and complete a medical before signing a long-term deal at the club.
Downing, who moved to Villa Park for around £10million two years ago, had been a prime summer target of Liverpool manager Dalglish, who saw bids of €13.4 million and €17 million rejected before an agreement for an undisclosed fee, believed to be in the region of €22 million, was struck.
Downing made it clear only last month, when on England duty, that he would not sign an extension with Villa, effectively forcing them to listen to offers.
Arsenal were reported last weekend to have joined the competition for his signature but Liverpool were always the front-runners, according to the player himself.
"It's a great feeling and I'm very happy to be here. It's been a long time coming and I've had to wait a few weeks, but I'm really pleased to be here," he told www.liverpoolfc.tv. "With the tradition, the manager and the players they have here, there was a big temptation to come here and once I knew of their interest, there was only one place I wanted to go.
"It will be a great feeling to run out at Anfield. It's always nice to come and play here. The atmosphere is always great and the fans are brilliant. When I wanted to come to Liverpool, it was the first thing I thought of - playing at Anfield in front of those great fans. I'm really looking forward to it."
The idea of winning silverware on a regular basis also appealed to Downing.
He said: "It would be nice to win something. I'm sure that's the same objective for everyone, not just me personally. My aim is to be in the team, to play well and give something back because the manager has pushed the boat out to get me here, so hopefully I can give him something back.
"Getting a few goals and a few assists for the lads up front, that's what I'm hoping for."
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