The defender has joined the Foxes on a three-year contract and becomes the latest player to join Sven-Goran Eriksson’s team as he looks to build a side capable of mounting a push for promotion to the Premier League.
Liverpool signed the left-back last summer after an impressive season for Fulham, in which he helped guide them to the Europa League final, but he failed to settle at Anfield and spent the second half of last season on loan at Nottingham Forest.
Eriksson told the club's official website: "Paul has been a Premier League player year in and year out throughout his career so he represents a very big signing for us.
"He wanted to come to Leicester City and it means a lot that proven, established top flight footballers want to be part of what we are building here.
"I know Paul very well as a player and as a person and he will be a top class addition to our squad."
The 30-year-old also has previous history with the Leicester manager, as Eriksson was the man who gave him the first of his two England caps in 2003.
Konchesky is set to join up with the squad on their pre-season tour of Sweden later this week.