The 21-year-old, who earned an England debut last October, arrives at the Liberty Stadium with Europa League experience and becomes Michael Laudrup's fifth summer signing
The 21-year-old spent three seasons at Anfield, making 69 appearances and scoring seven goals, with Roy Hodgson affording him an England debut in October, 2012, against San Marino.
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Shelvey wrote on Twitter: "Just wanna say thank you to every one of the Liverpool fans for there support! They were first class. And will be truly missed..
"Will miss the city very much.. And the club! Owe a lot to everyone there! Thank you. Time to start a new chapter in life in Wales. Thank you."
Ahead of Swansea's debut Europa League campaign, the midfielder brings European experience having netted four goals in 10 outings for Liverpool last term.
Shelvey becomes Michael Laudrup's fifth summer signing following the return of Jonathan de Guzman on loan from Villarreal and the permanent arrivals of Jordi Amat, Jose Canas and Alejandro Pozuelo.