The 24-year-old, whose Anfield career was disrupted by injuries, could be in contention to play at Arsenal on Saturday.
The 24-year-old, who came through the Reds' youth system, has sealed a move to Selhurst Park and could be in contention to play at Arsenal on Saturday after both clubs formally announced the move.
Kelly took to Twitter to thank Liverpool and announce his departure from Anfield.
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"I would like to thank all the managers at [Liverpool] for making my wish from the age of seven come true playing for one of the biggest clubs in the world," he wrote. "Most of all [I] would like to thank the fans for supporting me since my home debut against Lyon in October 2009, even through injuries, always by my side.
"Now to start a new chapter of my football career at Crystal Palace, a great club with unbelievable fans excited already for the weekend."
Kelly made 33 Premier League appearances at Liverpool and also spent a spell on loan at Huddersfield Town in 2009.