The centre-back's deal with former club Manchester City expired on Monday and the club have confirmed the 32-year-old put the finishing touches to his move to Anfield on their first day of pre-season training.
An agreement had been in place with Toure for some time but he could not formally sign until the opening of the transfer window.
"This means a lot to me. Firstly, I'm joining one of the best clubs in England," Toure told liverpoolfc.com.
"When I left City it was important for me to stay in England because it's the best league - and to join Liverpool is massive for me.
"I chose Liverpool because of the history and because of the spirit of the team and the people here."
Most of Liverpool's squad, including Toure and new signings Luis Alberto, Iago Aspas and Simon Mignolet, were all back at the club's Melwood training ground today.
The only absentees were those players who have had international duty this summer, with the most high-profile of those being Luis Suarez.
His involvement with Uruguay, along with Reds team-mate Sebastian Coates, and Spain goalkeeper Jose Reina at the Confederations Cup in Brazil means they have all been given an extended break.
The striker's future remains in doubt, however, after a series of interviews while back in South America in which the 26-year-old outlined his dislike of the British press and admitted a move to Real Madrid would appeal.
Also absent were youngsters Conor Coady, Jon Flanagan and Suso, who have been involved in the Under-20 World Cup in Turkey.
Some of the players, including the likes of Raheem Sterling, Joe Allen, Steven Gerrard - all injured towards the end of last season - and Daniel Sturridge have done some pre-preparation work at Melwood in the last week or so to help them get back up to speed.
Midfielder Jonjo Shelvey also rejoined his team-mates despite increasing speculation about his future.
The 21-year-old has been linked with Norwich, Crystal Palace, West Ham and Swansea.
Swans chairman Huw Jenkins claims he has already opened discussions with the Reds about the midfielder.
"There is an interest there and we are talking to Liverpool," he told the South Wales Evening Post.
With the arrival of Alberto and Aspas and the return to fitness of Gerrard and Allen there is huge competition for places in Liverpool's midfield and the club are believed to be prepared to allow Shelvey to leave.