Philippe Coutinho is joining Barcelona after Liverpool agreed to sell the Brazilian in a deal that makes him the second-most expensive player in soccer history.
Barcelona did not reveal the cost of the deal for the 25-year-old playmaker but a person familiar with the details told The Associated Press that the transfer could be worth 160 million euros ($A268 million).
It's understood the fee consists of an initial 120 million euros, with a further 40 million euros hinging on add-ons involved in the signing.
Barcelona said the buy-out fee in his contract will be 400 million euros but have not yet confirmed when they expect Coutinho to be official unveiled or make his debut.
The transfer cost is only surpassed by the Paris Saint-Germain acquisition of Neymar last summer -- and the impending permanent transfer of Kylian Mbappe at season's end.
Barcelona have now reinvested the 222 million euros windfall it received from PSG after Neymar's world-record transfer to the French club in August.
Barcelona said Coutinho will sign a contract for the rest of the ongoing season and five more seasons.
Liverpool rejected three bids from Barcelona for Coutinho in August.
"It is with great reluctance that we -- as a team and club -- prepare to say farewell to a good friend, a wonderful person and a fantastic player in Philippe Coutinho," Reds manager Juergen Klopp said on Liverpool's website.
"It is no secret that Philippe has wanted this move to happen since July, when Barcelona first made their interest known.
"I can tell the Liverpool supporters that we, as a club, have done everything within our means to convince Philippe that remaining part of Liverpool was as attractive as moving to Spain, but he is 100 per cent certain his future -- and that of his family -- belongs at Barcelona."
On announcing Couninho's signing, Barcelona hailed Coutinho as "a young player with potential still to be tapped."
His arrival means that Barcelona will likely part ways with one or more of Andre Gomes, Arda Turan and Rafinha.
Coutinho will not be able to play for Barcelona in the Champions League since he has already featured in the competition with Liverpool in the group stage.
But he will be available for Barcelona's bid to reclaim the Spanish league title from Real Madrid and defend their Copa del Rey crown.
Coutinho made the leap from Brazilian club Vasco de Gama to Inter Milan in 2010.
He got a taste of the Spanish league in a six-month loan deal at Espanyol in 2012 before he then made the move to Liverpool in January 2013.
He scored 41 goals in 152 Premier League appearances for the Reds, including seven in 14 matches this season.
Spanish league leaders Barca broke their own transfer record to sign France forward Ousmane Dembele from Borussia Dortmund in August for a fee of 105 million euros ($A167 million) that could rise to 147 million euros ($A234 million).