The 23-year-old becomes the fourth signing of the Brendan Rodgers era, and could make his debut for the club in the Reds’ FA Cup tie against Mansfield on Sunday.
Rodgers had made the England forward one of top targets over the summer and will be delighted to have finally signed his man.
"Brendan Rodgers said he sees me here for a long time - and I also see myself here for a long time. I've not signed here to play for a couple of years and then move on," Sturridge told Liverpool's official website.
"I've signed to be here for as long as possible. It's a humongous club - for me, one of the biggest in the world - and to have the fans and world-class players we have here is amazing."
Sturridge had made just one league start for Chelsea this season, and is delighted to have moved to a club as steeped in history as Liverpool.
“I am humbled and happy to be here,” he said.