The move sees the former Parma man link up with Brendan Rodgers for a third time after he worked under the Northern Irishman at Chelsea and Swansea.
Borini has only been with Roma for a season, after joining on a free transfer from Chelsea in the summer of 2011, and managed nine goals in 20 starts after joining them on loan from Parma at the beginning of the 2011-12 campaign.
The 21-year-old made his international debut for Italy in their 1-0 home defeat to the United States in February and was selected for the Euro 2012 squad - although he did not play in the tournament.
Borini is Rodgers' first signing since his arrival on Merseyside, after he replaced Kenny Dalglish in the close season, and may hasten the departure of England forward Andy Carroll on loan.
And Rodgers is sure the Italian is the perfect fit for Reds, and believes the Anfield faithful will take to his style of play.
"The supporters are going to love him," Rodgers told Liverpoolfc.com.
"He's a big talent, 21 years of age, he scores goals, and his passion, focus and concentration is a very important part of his game - and a big part of what you want from a player."
Having nurtured Borini during his time as reserve coach at Chelsea, and subsequently during a successful loan spell when on loan in Swansea's promotion season, Rodgers knows better than most of the talent of the Bologna-born striker.
"I've known him since he had just turned 16 years of age. We (Chelsea) took him in from Bologna when he was 16 and he progressed incredibly well as a young player to go on to play for the first team at Chelsea," Rodgers said.
"It didn't work out in terms of he couldn't agree a contract, but before he left I took him on loan to Swansea and he made a big, big impression there and really helped us in our promotion charge that season.
"As I said, he's a goalscorer, but he's a multifunctional player who can play in a number of positions - and someone I believe has got great growth."
Borini has agreed a long term deal at Anfield, and will wear the number 29 shirt.
Meanwhile, midfielder Maxi Rodriguez has left the club ahead of his proposed move to Newell's Old Boys.
The Argentine was brought to Anfield on a free transfer from Atletico Madrid in January 2010 by then manager Rafael Benitez, yet initially only featured sporadically.
His career at Anfield took off, however, under Roy Hodgson, as the 31-year-old notched 10 goals in 28 Premier League appearances, including two hat-tricks, against Birmingham City and Fulham respectively.
Rodgers had previously confirmed his attempts to keep Rodriguez at Anfield, suggesting the midfielder would 'understand 120 per cent' his tactical approach.
