After previously spending loan spells at Blackpool and Bristol City, the 21-year-old defender has returned to Scotland for the first time since leaving Rangers in 2010
The 21-year-old moved to Liverpool from Rangers in 2010 but has only appeared twice for the Reds since, embarking on loan spells at Championship sides Blackpool and Bristol City.
And three years on, Wilson has returned to Scotland, where he will ply his trade for a side that currently lie ninth in the Scottish Premier League.
Hearts boss John McGlynn told the club's official website: "Danny is a quality player and someone we know a lot about.
"Even at such a young age, he brings a lot of experience and not only will he be a very good addition to our squad, he will be a good influence on the young players we have here.
"He has been playing regularly down south so fitness won't be a problem and hopefully it won't be long before we see him in a Hearts shirt."
Wilson has been capped for the Scottish national side five times and becomes Hearts' first signing of the January transfer window.