The 25-year-old centre-back – who can also operate at left-back – has penned a long-term contract at Anfield and will help to ease Jurgen Klopp’s current defensive injury crisis.
Davies’ arrival on Merseyside is expected to be followed by that of Schalke defender Ozan Kabak before the transfer window slams shut at 11pm GMT on Monday evening.
“I’m obviously delighted to be here,” Davies – who will wear the no28 shirt at Anfield – told Liverpool’s official website. “It’s a huge opportunity.
“Obviously it came as a bit of a surprise when it first came but once you start to get your head around it, the opportunity that is in front of me is incredible. I’d be silly to not make the most of it and learn off the players [at the club].
“I’ve never actually been to Anfield and I haven’t had a look around yet. I had a quick look out and had a look at the pitch and it looks like carpet, which obviously you’d expect.
“I haven’t actually walked out of the tunnel yet, so I’m looking forward to that. Just to be in this kind of atmosphere is brilliant.”
Davies’ Preston deal was due to expire in the summer and the defender had looked set to strike a pre-contract agreement with Celtic until Liverpool swooped on Sunday.
The deals for Davies and Kabak will come as huge relief for resurgent Liverpool and Klopp, who was forced to use his 12th different centre-back partnership in just 21 Premier League matches against West Ham on Sunday with Virgil van Dijk and Joe Gomez currently long-term absentees and the likes of Joel Matip and Fabinho also out injured.
Davies came through the youth system at Preston and spent a total of 15 years at the club, making 144 senior appearances.
The Championship outfit have loaned Scottish centre-back Liam Lindsay from second-tier rivals Stoke City to compensate for Davies’ exit.