The midfielder confirms that he is on his way to Anfield leaving the League Two side "disappointed" at having lost a hot prospect
The Railwaymen had hoped to hold on to the teenager after a proposed move to the Etihad Stadium fell through last month yet have lost their battle with the youngster now heading to the Premier League.
The Merseyside giants have secured the youngster's signature, for an undisclosed fee believed to be in the region of £300,000, potentially rising to £1 million depending on appearances.
A spokesman for the Cheshire club told reporters: “We are naturally disappointed that Dan has decided to sign for Liverpool.
“The club has received an undisclosed fee and future add-ons but we would have much preferred to have seen him play for our first team.”
Smith arrived at Crewe aged just 11, and has since gone on to earn international recognition with the England youth team.
Smith announced the move himself via Twitter, posting a picture of himself with Liverpool boss Kenny Dalglish with the caption 'signing for Liverpool'.