Cole was considered surplus to requirements at Stamford Bridge and was allowed to leave the club without a renewed contract, sparking interest from Arsenal, Tottenham Hotspur, Manchester United and West Ham.
But Liverpool, who were linked with the midfielder over the weekend, have confirmed Cole’s capture on a four-year deal worth around Ã‚Â£90,000-a-week.
A statement on Liverpool’s website read: “Liverpool FC are delighted to confirm the signing of Joe Cole on a four-year deal.”
“The England midfielder has agreed personal terms with the Reds and will undergo a medical in the next 48 hours.”
Cole had also held talks with Tottenham Hotspur but the London outfit will now step up their pursuit of Manchester City forward Craig Bellamy, who is unlikely to see much first team action at Eastlands after the arrival of World Cup winner David Silva.
Meanwhile Argentina defender Emiliano Insua has agreed personal terms with Italian side Fiorentina in a deal worth Ã‚Â£5 million.
Insua arrived on Merseyside in 2006 and broke into the first-team last year due to first-choice left-back Fabio Aurelio picking up a number of injuries. But despite a promising start to the season Insua failed to impress the Anfield faithful resulting in his move away from Liverpool.
MORE: Man United latest news
MORE: Arsenal latest news
MORE: Chelsea latest news
MORE: Liverpool latest news