"It is very exciting for me to sign for Liverpool and it gives me a great feeling," said Babel.
"Once Liverpool came in for me this was an easy decision to make. Liverpool is a club with a great manager, great players and great supporters.
"I can only improve as a player by playing for a great team like Liverpool and I can learn a lot here.
"Having Dirk Kuyt already here will be a big help to me because he will help me settle in quickly."