The 25-year-old becomes Liverpool boss Brendan Rodgers' fifth summer signing, following those of Iago Aspas, Luis Alberto, Simon Mignolet and Kolo Toure.
Left-back Cissokho told Liverpool's official website: "I'm very happy to be here. I think we have a great team and great fans and together we can achieve big things.
"It's going to be a great experience to be able to rub shoulders with the club's top-quality players.
"I have experience in the game, but coming here there will still be lots of things to learn and discover as I work with everyone every day.
"I can learn from my new manager, get to know the new style of play here, familiarise myself with different opposition teams and learn the language. It's going to be a great experience for me, and of course playing for the club for the first time is something I'm excited about."
Cissokho has one France cap, and has played Champions League football with Porto, Lyon and Valencia.
He played at Anfield in 2009 when Lyon beat Liverpool 2-1.