The Belgium international arrives at Anfield for an undisclosed fee, believed to be in excess of £9million, and came through his medical at their Melwood training ground earlier on Tuesday.
Brendan Rodgers has been busy in the transfer market this summer with Mignolet joining Kolo Toure, Luis Alberto and Iago Aspas in making the move to Merseyside.
"I am delighted that we have been able to sign one of the top goalkeepers in the Barclays Premier League," Rodgers told his club's official website.
"Simon will join a club that will give him an opportunity to demonstrate and improve his huge talent."
The 25-year-old impressed after arrving in the Premier League from Sint-Truiden in 2010, establishing himself as one of the most promising keepers in Europe.
Mignolet will now have to battle with Pepe Reina for the starting spot at Liverpool, while Brad Jones is also on the books at Anfield, and it is a challenge he is relishing.
"I've been in big competitions wherever I've been - in Belgium with the national team and in Sunderland with Craig Gordon and Keiren Westwood, who are international goalies. Now it's the same again with Pepe and with Brad," he told his new club's website.
"It's only a good thing - to be competitive and to train as hard as you can, it can only bring the best out of you.
"Pepe is an experienced goalkeeper who has proven a lot over the years. I'm looking forward to working with him, the same as I am with Brad and the goalie coach.
"It's a challenge but that's what you want. You want to play in the big games, you want to play for a big club and to play with pressure.
"I'm very confident in myself and I can't wait to get the first clean sheet under my belt. I've never been a nervous person. I'm quite confident in my own abilities."
Mignolet played a key role in helping Sunderland beat the drop from the Premier League last season and leaves Black Cats boss Paolo Di Canio with a significant void to fill at the back.
Di Canio told Sunderland's official website: "Simon is a fantastic footballer, a fantastic professional and a fantastic lad and I would like to personally thank him for his contribution to the team last season.
"He was crucial to what we achieved and he goes with the very best wishes of everyone at the club.
"I would like to assure our fans that there is a huge amount of work going on behind the scenes. Our aim is to build a competitive squad for the new season and this deal will give us further ability to strengthen the side."