Joe Gomez moved to Anfield after playing only 24 Championship games for Charlton last season.
The England U19 international, who can play at either full back or central defence, finally completed a dramatic rise to Premier League stardom after being drafted into Charlton's U18 squad when he was only 13.
It's a bit surreal and it hasn't really hit me yet
Joe Gomez
Since then Gomez, who starred in the England U18s European championships success last summer, has also represented his country at U16 and 17s level.
His move now clears the way for Uruguayan Sebastien Coates to complete a £2million move to Sunderland where he spent last season on loan.
Gomez said last night: "It's a dream come true. It's a bit surreal and it hasn't really hit me yet. But I'm buzzing and just excited to get started."