The former Chelsea midfielder has yet to complete his medical, but terms are agreed on a four-year deal.
Cole had been linked with West Ham, Spurs and Arsenal, but new Liverpool manager Roy Hodgson will be delighted to have snapped up the England international on a free transfer.
"Liverpool FC are delighted to confirm the signing of Joe Cole on a four-year deal," read a club statement. "The England midfielder has agreed personal terms with the Reds and will undergo a medical in the next 48 hours."
Cole will wear the number 7 shirt, as worn by Liverpool legends Kevin Keegan and Kenny Dalglish over the years.
